Netflix Warning: Bernstein Says Stock Has 37% Downside, Won't Come Close To Long-Term Expectations

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Bernstein’s Carlos Kirjner mentioned Netflix, Inc. NFLX's mixed results for Q1, while issuing subscriber addition guidance for Q2 that was below expectations.

Kirjner maintained an Underperform rating on the company, with a $62 price target.

Q1 Results

The analyst mentioned the company’s “consolidated revenues of $1,958 million came just shy of consensus at $1,970 million, while operating income of $45 million was a few million dollars below expectations of $55 million.”

Related Link: Buy The Weakness In Netflix Shares, Says JPMorgan

However, both domestic and international net additions beat the consensus and the guidance.

Q2 Guidance

On the other hand, management guided to weaker-than-expected domestic and international streaming net additions for Q2, at 0.5 million domestic net adds and 2 million international net adds.

“After two quarters in a row of significant deceleration, domestic net adds were just shy of flat YoY in 1Q16. However, guidance indicated a material YoY decline in net adds going forward,” Kirjner stated.

The analyst added that it was difficult to justify Netflix's current valuation.

The stock traded recently at $96.84, down 10.7 percent on the day.

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Posted In: Analyst ColorShort IdeasReiterationAnalyst RatingsTrading IdeasBernsteinCarlos Kirjner
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