Netflix Inc. (NASDAQ: NFLX) reported second-quarter 2016 results after markets closed Monday. As one of the most widely followed stocks in the market since its meteoric rise, investors and analysts alike appear to be transfixed on this massive stumble in the most recent earnings report. Despite the earnings being in line, the revenues missed, but this was not the biggest problem in the report. As a result, we have put together what analysts are saying after this earnings report, to get a clearer picture on where this stock is going.
24/7 Wall St. has taken some of the key highlights from the earnings report and put those together with what analysts are saying after the fact about this video distribution company.
The company posted earnings per share (EPS) of $0.09 on revenues of $1.97 billion, which compared to Thomson Reuters consensus estimates of $0.02 EPS and $2.11 billion in revenues. In the same period a year ago, the company reported EPS of $0.06 on revenues of $1.48 billion.
Netflix puts its U.S. streaming subscriber numbers at 46 million, while International streaming subscriber numbers grew by 1.99 million to 33.89 million. Total subscribers now number 83.2 million, up by more than 1.5 million sequentially and about 17.6 million from the same period last year.
Sequential U.S. subscription additions of 290,000 were far below a consensus analysts’ estimate of 532,000. International additions were expected to rise by 2 million sequentially. Analysts and investors still consider subscriber additions to be the company’s most important metric. The consensus estimates, by the way, were the same as the company guided when it reported first-quarter results.
For the third quarter of 2016, Netflix expects to add just 400,000 new paid subscribers in the United States and 2.1 million internationally. Margins in the United States are expected to rise 0.8% in the third quarter and, internationally the company expects the second quarter’s net loss of $69 million to widen to $95 million.
Netflix continues to believe that it can attract 60 million to 90 million U.S. streaming subscribers and that it can “run around break-even on a net income basis in 2016” and turn a “material” profit in 2017 and beyond. To achieve that, the company said, it plans to reduce international losses and grow U.S. profits. A worthy goal, but perhaps not easy to achieve with continuing competition for entertainment dollars and eyeballs in the United States.
Myriad analysts weighed in on Netflix after the earnings were released:
- BTIG has a Buy rating and lowered its price target to $130 from $150.
- Baird has a Neutral rating and lowered its price target to $94 from $108.
- BMO lowered its price target to $85 from $115.
- Canaccord Genuity has a Buy rating and lowered its price target to $115 from $120.
- Citigroup has a Neutral rating and lowered its price target to $92 from $106.
- Cowen has an Outperform rating and lowered its price target to $110 from $130.
- Credit Suisse raised its price target to $122 from $119.
- Jefferies has an Underperform rating and lowered its price target to $76 from $80.
- JPMorgan lowered its price target to $116 from $125.
- Mizuho has a Neutral rating and lowered its price target to $90 from $109.
- Nomura has a Buy rating and lowered its price target to $110 from $115.
- Oppenheimer lowered its price target to $114 from $123.
- Pacific Crest lowered its price target from $130 to $125.
- Raymond James lowered its price target to $120 from $130.
- RBC lowered its price target from $140 to $130.
- SunTrust Robinson has a Neutral rating and lowered its target to $100 from $110.
- UBS downgraded it to Neutral from Buy and lowered its price target to $92.
- Wedbush has an Underperform rating and raised its price target to $50 from $45.
Shares of Netflix closed Tuesday down more than 13% at $85.84, with a consensus analyst price target of $116.47 and a 52-week trading range of $79.95 to $133.27.
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