Goldman Sachs Hikes Netflix Price Target To $140, Says Guidance Surprised

In a report published Thursday, Goldman Sachs analyst Heath P. Terry maintained a Buy rating on

, while raising the price target from $111 to $140, after the company's 3Q guidance surprised on the upside. Netflix reported 2Q revenue of $1.64bn, representing 22.7 percent y/y growth, marginally short of the consensus expectation of $1.65bn. The shortfall was a result of currency headwinds, which offset stronger-than-expected subs growth. Netflix recorded domestic streaming net adds of 0.9mn, higher than consensus expectations of 0.6mn. International adds came in at 2.4mn, ahead of consensus expectations of 1.9mn. "Subscriber growth benefitted from the strongest content quarter the company has had to date and adoption in earlier stage int'l markets," analyst Heath Terry said. Netflix guided to 3Q streaming net adds of 3.6mn, with 1.2mn domestic and 2.4mn international, ahead of the consensus of 3.3mn. The EPS estimates for 2015, 2016 and 2017 have been raised from $0.16 to $0.29, from $0.41 to $0.52 and from $1.36 to $1.49, as continued FX headwinds are expected to be offset by "higher than expected content and marketing leverage." Terry believes that Netflix could create "significant shareholder value by replicating its model globally, driving scale benefits, and expanding margins."