Netflix Climbs As Analysts Predict Better Than Expected Subscriber Growth

The shares of Netflix (NFLX) are climbing after UBS and Piper Jaffray predicted that the company's third-quarter subscriber data would come in above expectations. UBS: The positive momentum that Netflix saw in the second quarter continued at similar rates in the third quarter, wrote analyst Doug Mitchelson, noting that Netflix said that it expected its subscriber momentum to ease in Q3.

The continued strong year-over-year subscriber growth "across almost all markets" came despite a downturn in the quality of the company's original programming last quarter, the analyst stated. He raised his Q3 U.S. net subscriber addition estimate by 100,000 to 850,000 and increased his Q3 international net add estimate by 300,000 to 3.95M. Analysts' consensus outlook for total Q3 U.S. and foreign subscriber net adds is 750,000 and 3.6M, respectively, he wrote. As a result, he predicted that the company's net subscriber adds for the second half of 2017 would beat the consensus outlook by about 1M, and he expects the stock to rise in the near-term, due to the "lackluster" performance of its stock this quarter and investors' belief that the company's Q3 results will be in-line with expectations. Mitchelson hiked his price target on the shares to $225 from $190 and kept a Buy rating on the stock.

PIPER: After analyzing Google search trends, Piper's Michael Olson believes that Netflix's international and domestic subscriber growth beat expectations last quarter. The analyst says the search data suggests that the company's U.S. subscriber base jumped 16% in Q3, while its foreign subscriber base surged by 71% year-over-year. According to Olson, the consensus outlook is 10.7% for U.S. subscriber growth and 42% for international subscriber growth. Although investors should not expect actual subscriber growth rates to be in-line with the numbers indicated by the search data, there is "a high likelihood" that Netflix's Q3 subscriber data will beat expectations, according to Olson. He kept a $215 price target and an Overweight rating on the shares.

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