The recent downgrade of Netflix, the best performer in the through 2013, was "premature" at best and the company could be worth billions more than its current valuation, CNBC's Jim Cramer said Tuesday.
"I've been saying … they can raise the price and no one could know the difference," Cramer said on "Squawk on the Street." "I really believe that. This is a really powerful story by a really excellent CEO."
Cramer said Netflix could be worth $30 billion compared to its current valuation of $21.3 billion, but the company would need to triple its international subscriber base. Cramer said that goal doesn't seem outlandish because of Netflix's low price points and sound business model.
(Read more: Cramer: Don't worry, be happy, buy this stock?)
Morgan Stanley downgraded Netflix stock Tuesday morning to "underweight" from "equal-weight" because of increasing competition from other streaming video providers, such as Hulu, HBO and Amazon.
(Read more: Can Netflix continue to outperform in 2014?)
"I'm beginning to hear this pushback," Cramer said. "People are reacting to the winner of the S&P last year and maybe it's moved too much. I continue to think the franchise is worth more and the international market is great."
Cramer added: "I think the downgrade is—I'm going to use the word—premature."
(Read more: Unloved stocks: Cramer sifts through 5 S&P laggards)
With a price-earnings ratio of more than 290 times, Netflix remains a pure momentum play, Cramer said. That works for fans and pleased users of the service, but not Cramer.
"That's not my style of investing," Cramer said. "That's pure momentum. Momentum is back, and analysts fight momentum on a daily basis."
Disclosure: Cramer's charitable trust does not own shares of Netflix.
—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."