Netflix: How High Are Earnings Expectations?

Netflix Inc NFLX is set to release earnings after the closing bell on Wednesday. The company has been thriving lately, and the success has been reflected in the stock’s surging share price. Netflix is up 105.2 percent so far in 2015, and was the top performing stock in the entire S&P 500 in the first half of the year.

Expectations
Expectations for the company’s Q2 earnings report are certainly high. Wall Street consensus estimates are for earnings per share (EPS) of $0.32 on revenue of $1.645 billion. However, the Estimize consensus estimates of $0.44 EPS on $1.654 billion in revenue are even higher. The question that many traders are asking themselves today is this one: are Netflix expectations so high that it will be impossible to meet them?

UBS’s take
According to UBS analyst Doug Mitchelson, the market will be focusing on Netflix’s international expansion efforts. “To the extent Netflix develops a successful entry in Japan, we expect investors will extrapolate such results to the rest of AsiaPac,” Mitchelson writes.

UBS is calling for Q2 EPS of $0.22, below consensus estimates. While the firm’s Q2 net add estimates for the U.S. are in line with consensus (600,000), UBS is estimating that Netflix will report 2.153 million net international adds for the quarter, beating consensus estimates of 1.934. UBS has a Buy rating on Netflix.

MKM
MKM Partners analyst Rob Sanderson also recently weighed in on Netflix. In addition to significant international growth opportunities, Sanderson believes that Netflix can exceed 60 percent U.S. penetration in coming years.

MKM is calling for Q2 EPS of $0.27 on revenue of $1.649 billion and has a Buy rating on Netflix.