Netflix Inc. (NASDAQ: NFLX) is scheduled to release its fourth-quarter financial results after the markets close on Tuesday. The consensus estimates call for $0.53 in earnings per share (EPS) and $5.45 billion in revenue. The same period of last year reportedly had $0.30 in EPS and $4.19 billion in revenue.
Netflix continues to expand its footprint in terms of its international numbers, but it faces some stiff competition domestically in the form of Disney and Apple entering the online streaming industry. With this competition comes tough questions that Netflix will have to answer going forward. As a result, Needham took a renewed look at the streaming service and where it could go from here.
In December, Needham downgraded Netflix to Underperform from Hold and said it anticipated as many as 4 million subscriber losses in 2020 amid increasing competition in the streaming market.
The firm also noted that Netflix needs to add in a lower-priced service to compete with new entrants (such as Apple, Disney+, Hulu and CBS) but that its balance sheet will not really support a lower-tier priced service.
In the report, Needham detailed:
We project NFLX will lose 4mm US subs in 2020 at its premium priced tier of $9-$16/ month. We believe NFLX must add a second, lower priced, service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock, each of which have $5-$7/month choices. Since NFLX’s balance sheet cannot withstand lower revenue (our view), we recommend a 6-8 minute/hour ad load to supplement a $5-$7/month consumer fee.
Excluding Tuesday’s move, Netflix stock had underperformed the broad markets with a decline of about 4% in the past 52 weeks. In the past quarter, the stock was actually up about 16%.
A few analysts weighed in on Netflix ahead of the report:
- UBS has a Buy rating with a $405 price target.
- Pivotal Research has a Buy rating and a $425 price target.
- Citigroup’s Neutral rating comes with a $325 price target.
- Wells Fargo rates it as Underperform with a $265 price target.
Netflix stock traded down 0.7% at $337.22 a share on Tuesday, in a 52-week range of $252.28 to $385.99. The consensus price target is $363.21.
The #1 Thing to Do Before You Claim Social Security (Sponsor)
Choosing the right (or wrong) time to claim Social Security can dramatically change your retirement. So, before making one of the biggest decisions of your financial life, it’s a smart idea to get an extra set of eyes on your complete financial situation.
A financial advisor can help you decide the right Social Security option for you and your family. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
Click here to match with up to 3 financial pros who would be excited to help you optimize your Social Security outcomes.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
