Credit Suisse Cuts Price Target On Netflix, Says 'Street Models Could Be Wrong'

Credit Suisse cut its price target on Netflix, Inc. NFLX from $432 to $417 Wednesday and maintained a Neutral rating following the company’s Q4 earnings release on Tuesday.

Analyst Stephen Ju noted that “Netflix reported 4Q14 revenue of $1.48b in-line with consensus as well as CS estimates...International and Domestic Streaming revenue were in-line with our CS estimates.”

Ju also cited “higher than expected marketing spend” which caused the domestic contribution profit to be $256.8 million versus the CS estimate of $260.9 million.

“This earnings report will be one that ultimately separates investors of differing time horizons as Netflix is committing to a higher level of content acquisition spend and compress consolidated margins near term to accelerate the launch in incremental International territories to expand its addressable market and ultimately longer term increase free cash flow dollars,” according to Ju.

Ju felt that with the company’s current international expansion timeline, the "street models could be wrong from 2Q15 to FY16."

The updated Credit Suisse revenue and Adjusted EPS projections for FY15 “are now $6.72 billion and $4.22 vs. prior $6.49 billion and $5.93, and FY16 are now $7.91 billion and $5.30 vs. prior $7.94 billion and $6.94.”

Netflix, Inc. traded at $411.43 in the pre-market, up 17.96 percent.