Netflix’s (NFLX) new value will increase on subscribers may fatten up its gross sales, analysts assume.

The streaming beast introduced late Thursday it could hike the price for its commonplace membership by $1 to $14. Its premium tier will see a $2 enhance to $18. The modifications will part in over the subsequent two months.

Jefferies analyst Alex Giaimo estimates the worth will increase may elevate Netflix’s gross sales by $500 million to $1 billion in 2021. Given Netflix’s robust content material slate, Giaimo doesn’t imagine the corporate is susceptible to dropping a fabric quantity of subscribers due to the worth enhance.

“Bears will argue that the atmosphere is extra aggressive now than it was throughout prior value hikes, however we proceed to imagine the near-term content material slate is underrated and significantly stronger than community friends. Historical past reveals short-term churn however continued long-term progress. Hike will assist with the troublesome 2020 comp,” stated Giaimo, who reiterated his Purchase ranking with a $585 value goal.

The bullishness on the worth enhance was echoed at Piper Sandler.

Analyst Yung Kim lifted his 2021 gross sales and EPS estimates on Netflix by $500 million and 19 cents, respectively. He reiterated his Obese ranking on Netflix shares and raised the worth goal to $643 from $630.

Netflix shares at present commerce at $504.

Netflix emblem is seen displayed on a telephone display on this illustration picture taken in Poland on October 18, 2020. (Photograph Illustration by Jakub Porzycki/NurPhoto by way of Getty Photos)

Netflix final raised costs in January 2019, however executives hinted strongly in current earnings calls that a rise loomed. So this week’s information is hardly a shock to the Avenue. In January 2019, Netflix’s service that gives two streaming units noticed a value enhance to $13 from $11. An affordable plan of $eight a month went to $9 and a high-end model went to $16 from $14.

Netflix shares are up 55% year-to-date, outperforming the Nasdaq Composite’s 25% acquire as buyers plowed into the inventory as a COVID-19 play and forward of the worth hikes. However with the worth will increase now recognized and Netflix reporting a disappointing third quarter this month, the inventory could possibly be poised for a near-term breather.

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Brian Sozzi is an editor-at-large and co-anchor of The First Commerce at Yahoo Finance. Comply with Sozzi on Twitter @BrianSozzi and on LinkedIn.

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