Why Analysts Are Hyping Up Netflix Ahead of the Report

April 14, 2018 by Chris Lange

Netflix Inc. (NASDAQ: NFLX) is set to report its first-quarter financial results on Monday. This has been the hottest FAANG stock over the past year, and it doesn’t look like it will be slowing down any time soon. Analysts are in agreement and are hyping up the stock.

Over the past 52 weeks, Netflix has drastically outperformed the broad markets, with its stock up about 116%. In just 2018 alone, the stock is up 62%.

Thomson Reuters consensus estimates are calling for $0.64 in earnings per share (EPS) on $3.69 billion in revenue for its first quarter. In the same period of last year, Netflix said it had EPS of $0.40 and $2.64 billion in revenue.

In its fourth quarter, Netflix registered global net additions of 8.3 million, the highest quarter in its history and up 18% compared to last year’s record 7.05 million net adds. This exceeded the 6.3 million forecast, due primarily to stronger than expected subscriber acquisitions, fueled by its original content slate and the ongoing global adoption of internet entertainment.

Merrill Lynch recently reiterated a Buy rating and a $300 price objective. Its earnings preview noted this:

Heading into 1Q earnings, expectations are high, as the stock has appreciated +47% YTD. Netflix ended 2017 on a high note, reporting higher international net adds than in any other quarter (+6.4mn). For 1Q, we expect Netflix to report international net adds of 4.95mn and domestic net adds of 1.46mn. Like 4Q, we expect stock performance post 1Q earnings will be dependent on the strength of international net adds and 2Q18 guidance. Continued subscription momentum in international markets is key to the valuation and driving the stock higher from here.

A few other analysts weighed in on Netflix:

  • Cowen raised its price target to $325 from $275.
  • Goldman Sachs raised its price target from $315 to $360.
  • Monness Crespi Hardt has a Buy rating with a $350 price target.
  • JPMorgan reiterated an Overweight rating and raised its target from $285 to $328.
  • Morgan Stanley reiterated it as Overweight and raised its target to $350 from $275.
  • CFRA (S&P) reiterated its Buy rating and $365 price target.

Shares of Netflix closed out the week at $311.65, with a consensus analyst price target of $286.62 and a 52-week range of $138.66 to $333.98.

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