Netflix Inc beat quarterly profit expectations on strong subscriber growth, but a lofty share price and concerns about whether the DVD rental company can keep growing rapidly capped stock gains.

Netflix on Wednesday raised its full-year subscriber, revenue and earnings forecasts. Analysts pointed to forays into home console entertainment consoles and rivals' financial troubles as potential drivers for future growth.

But others voiced concerns about whether Netflix can continue to grow at the same pace it has enjoyed or continue to justify its valuation.

Its shares had leapt 62 percent since the start of 2010 to an all-time high of $89.10 last week.

The stock is too expensive. They're doing everything right but the only question is how long they can sustain this level of growth, said Michael Pachter, analyst with Wedbush Morgan Securities, who has a price target for Netflix at $60 a share, well below current trade prices.

Netflix has flourished as rivals like Blockbuster Inc have lost market share due to an aggressive strategy to provide streamed movies via various devices from game consoles to, more recently, Apple Inc's iPad.

Once Netflix has penetrated the install base of the game consoles, growth will slow dramatically, Pachter said.

Netflix shares fell more than 5 percent in afterhours trade but then recovered to $88.35, up 1.6 percent from the $86.98 close on Nasdaq.

BY THE NUMBERS

Analysts also say Netflix has plenty of growth potential with Blockbuster's troubles deepening, and Netflix' ability to execute profitably and cut further costs as it moves increasingly to a streamed format.

The Los Gatos, California-base company said first-quarter net income was $32.3 million, or 59 cents per share, compared with $22.4 million or 37 cents per share, a year earlier.

Netflix said revenue for the first quarter of 2010 was $493.7 million, up 25 percent from $394.1 million in the year-earlier quarter.

Analysts, on average, had expected the company to report earnings of 54 cents on revenue of $493.1 million.

Netflix ended the first quarter with about 13,967,000 subscribers, up 35 percent from a year earlier and up 14 percent from the fourth quarter of 2009.

Netflix said it expects to end full-year 2010 with subscribers in the 16.5 million to 17.3 million range, up from its previous forecast of 15.5 million to 16.3 million.

It forecasts revenue of $2.11 billion to $2.16 billion, up from its previous target of $2.05 billion to $2.11 billion, and net income of $132 million to $144 million, up from its previous $125 million to $137 million target.

(Reporting by Susan Zeidler; Editing by Tim Dobbyn)

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