Media

What Analysts Are Saying About Netflix Streams Strong Earnings

Chris Lange

Published: July 18, 2017 12:46 pm

Last Updated: January 12, 2020 10:02 am

Netflix, Inc. (NASDAQ: NFLX) reported its most recent quarterly results after the markets closed on Monday, and the online streamer posted its best quarterly net results in over six years. Investors were thrilled and sent shares higher. But this was only half of it. Analysts took the  opportunity to raise their price targets, and needless to say, the bulls are out in force for this stock.

Shares of Netflix were last trading up about 12% at $181.25, with a consensus analyst price target of $160.95 and a 52-week range of $84.50 to $181.49.

24/7 Wall St. has included some highlights from the second-quarter earnings report as well as what analysts are saying after the fact.

Netflix said it had 15 cents earnings per share (EPS) and $2.785 billion in revenue, compared with consensus estimates from Thomson Reuters that called for 16 cents EPS and $2.76 billion in revenue. In the same period last year, Netflix reported 9  cents in EPS and $2.11 billion in revenue.

For the second quarter, global net adds totaled a second-quarter record 5.2 million as opposed to a forecast of 3.2 million. Net additions increased 5% sequentially, bucking historical seasonal patterns. For the first six months of 2017, net adds are up 21% year-on-year to 10.2 million.

In terms of guidance, the company expects to see 32 cents in EPS and $2.97 billion in revenue for the third quarter. At the same time, Netflix expects to see 4.40 million in net additions for the quarter, making a total of 108.35 million memberships.

Credit Suisse remained Neutral on Netflix, but the firm boosted its price target to $190 from $154. The brokerage firm detailed in its report:

Netflix posted a beat-and-raise result due primarily to the ongoing strength of its owned-and-operated content (combination of 13 Reasons Why as well as House of Cards S5). International results for the second quarter were particularly strong as the company added 3.7 million paid subs, against the usual seasonal pattern of a drop-off in the quarter and the momentum will likely continue into 2H17 with a strong release slate which will include Narcos S3, Stranger Things S2, and The Crown S2. And whereas we were expecting the usual summer lull for 2Q/3Q, 2017 will likely close with Netflix adding closer to about 16 million paid subscribers in its Int’l operations versus our prior expectation of 13.9 million; our domestic net paid subscriber add remain essentially unchanged at 4.8 million.

Merrill Lynch pointed out that Netflix beat second-quarter estimates with record subscriber gains as a strong content slate drives subscriber acquisitions. The second-quarter subscriber beat proves that content is king and big investments in content can pay off. The firm raised its price objective to $199, but it sees potential for higher valuation if Netflix is more aggressive on pricing.

A few other analysts weighed in on Netflix as well:

• Canaccord Genuity raised its price target to $200 from  $175.
• Cowen has an Outperform rating and lifted its price target to $197 from $170.
• Instinet has a Buy rating and increased its price target to $195 from $175.
• Jefferies has a Hold rating and boosted its price target to $165 from $141.
• JP Morgan has an Overweight rating and raised its price target to $210 from $178.
• Morgan Stanley lifted its price target to $210 from $185.
• RBC has an Outperform rating and boosted its price target to $210 from $175.
• FBN Securities reiterated an Outperform rating and increased its price target to $190 from $165.
• Loop Capital reiterated a Buy rating and lifted its price target to $205 from $180.