Netflix (NFLX) is trying to get through a very tough year one step at a time "despite the foot with the bullet hole," as CEO Reed Hastings recently quipped.

The company has made some progress recently by signing content deals and expanding its reach on mobile devices. Even hedge fund manager Whitney Tilson, who famously shorted the stock, is now long.

The focus for the next few months will be on expansion in the U.K. and Ireland in 2012, which will help hedge the company against increasing competition from Amazon (AMZN) and Dish Network's (DISH) Blockbuster.

See our full analysis for Netflix

International efforts

Our price estimate of $142, implying a premium of more than 60% to the market price, reflects our long-term optimism for the company. Netflix has recently signed a multi-year deal with MGM studios to exclusively stream its first-run movies in the U.K. and Ireland.

Additionally, it inked another deal with Lionsgate UK as it prepares for its foray in this market. Netflix is also in talks with ITV to acquire some of its content for streaming in this new territory. Netflix is likely to run at a loss, at least in the first half of the year, due to several content deals it needs to strike in order to stream in the U.K. and Ireland.

Domestic development

On the domestic front, Netflix and Disney's (DIS) ABC Television Group have reached a new agreement to stream seasons from ABC's shows. The company also placed its streaming service on Barnes & Noble's (BKS) Nook tablet and on Amazon's new Kindle Fire. Netflix overhauled its interface for apps on the Android mobile platform.

There is no single way to repair the damage that the company has done to itself. It is going to take a good deal of time and focused efforts to regain customer confidence. We're optimistic that Netflix will get there, and think the current valuation does not justify the potential of the company. Overall, analysts seem positive on Netflix with their price targets, and it seems like the worst is over for the company.