Netflix Pressured After Soft Subscriber Guidance, Confirming Gaming Plans

THESIS UNCHANGED DESPITE MIXED RESULTS: Piper Sandler analyst Thomas Champion reiterated an Overweight rating on Netflix with a $600 price target after the company reported a "slightly weaker" second-quarter print. Champion told investors that despite the "mixed" results, his long-term thesis "looks relatively unchanged while the near-term trajectory should improve into year-end".

Voicing a similar opinion, UBS analyst John Hodulik kept his Buy rating and $620 price target on Netflix after quarterly results, as the quarter showed the company's "resiliency" amid "difficult" COVID comps. Netflix's lower subscriptions guide is driven by the relatively thinner third quarter content slate, but with ramping production and the return of popular series, the second quarter is likely to mark the low point for subscription growth, Hodulik contended, adding that the inflecting trends should drive improved investor sentiment.

Keeping an Overweight rating on the shares, JPMorgan analyst Doug Anmuth raised the firm's price target on Netflix to $625 from $600. The analyst came away from the company's quarterly earnings report "incrementally positive" on Netflix shares. He is "increasingly confident" in the second half of the 2021 content slate and sees "more reasonable" expectations into 2022 that should make Netflix "safer to own."

Deutsche Bank analyst Bryan Kraft also raised his price target on Netflix to $590 from $575 and reiterated a Buy rating on the shares post the company's second-quarter results. While the third-quarter guidance of 3.5M net additions was lower than the 5M-5.5M range that most investors were looking for, second-quarter net adds came in above management's guidance of 1M, Kraft told investors in a research note of his own. More importantly, Netflix's second half of 2021 content slate is weighted heavily toward the fourth quarter, which should drive a significant acceleration in Q4 net adds over Q3, the analyst said. Meanwhile, Credit Suisse analyst Douglas Mitchelson raised the firm's price target on Netflix to $643 from $586 and kept an Outperform rating on the shares.

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