While analysts and investors would like to see revenues and profits grow when Netflix Inc. (NASDAQ: NFLX) reports fourth-quarter and full-year results after markets close Tuesday, the number that will get most of the attention is subscriber additions. At the end of the third quarter, the company missed on expectations and the stock got pummeled, dropping 20%.
Netflix has forecast net additions of 4 million subscribers in the fourth quarter, with 1.85 million new subscriptions in the United States and 2.15 million internationally. If the company makes its number, it will have just over 57 million subscribers.
Competition for eyeballs is getting stiffer too. Both HBO and Showtime have announced that they will begin offering streaming content. Walt Disney Co. (NYSE: DIS) has struck a deal with Dish Network Corp. (NASDAQ: DISH), and both Hulu and Amazon.com Inc.’s (NASDAQ: AMZN) Amazon Prime Instant Video are not doing well.
Already about 55% of U.S. households subscribe to a streaming video service, and the U.S. market may soon hit a saturation point. International expansion might help, but it is turning out to be expensive.
Analysts appear to be sanguine about the company with recent upgrades from Cowen (from Market Perform to Outperform) and Stifel Nicolaus (from Hold to Buy). Cowen’s price target on the stock is $360, compared with a consensus of $413 as of Tuesday morning. Stifel’s price target is $380.
Oppenheimer included Netflix as one of its 35 best trading ideas for 2015, based partly on the company’s international growth. Oppenheimer’s price target is $431.
Netflix is also one of the top picks at R.W. Baird, again as a result of strong growth internationally. Like Oppenheimer, Baird also pointed to Netflix’s strong original content and added the observation that rising costs for pay TV are also encouraging for Netflix. Baird’s price target on the stock is $515 a share.
Netflix shares traded up about 1.3% shortly after Tuesday’s opening bell, at $342.12 in a 52-week range of $299.50 to $489.29. Shares popped more than 4% on Friday.
ALSO READ: Why Disney CEO Makes $47 Million
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