Market Overview

Subscriber Growth Woes Continue To Haunt Netflix; Company Could Be A Legitimate Target For Disney, Apple

Subscriber Growth Woes Continue To Haunt Netflix; Company Could Be A Legitimate Target For Disney, Apple
Related NFLX
Q3 Earnings Season For FANG: 1 Down, 3 To Go
AT&T-Time Warner Merger Deserves 'Very Rigorous' Scrutiny: Senator
Amazon Misses, Google Beats; Apple's New Products; Verizon-Yahoo Is On -- Eye On Tech (Seeking Alpha)

Shares of Netflix, Inc. (NASDAQ: NFLX) are up more than 4 percent Monday following weekend rumors of a possible Walt Disney Co (NYSE: DIS) buyout. However, the latest survey results from Baird indicate that Q3 could be another disappointing growth quarter for Netflix.

According to analyst William Power, the firm’s Q3 subscriber penetration survey suggests slightly positive to slightly negative U.S. subscriber growth on the quarter. Despite investor optimism about the success of “Stranger Things,” Baird found only 48.6 percent of Americans surveyed reported a Netflix subscription in Q3. That number is down from 49.2 percent in Q2.

Netflix guided for 300,000 net U.S. subscription adds in Q3, but Power wouldn’t be surprised to see Netflix once again fall short of its guidance.

Related Link: Worried About Netflix? Here's An Uber Bullish Take

In terms of the buyout rumor, Power believes Netflix could be a legitimate target for Disney, Apple Inc. (NASDAQ: AAPL) or another buyer, but determining the timing and likelihood of a deal is extremely difficult.

In the meantime, Netflix will continue to be pressured by increasing competition.

“Netflix is still the dominant player in the space and has successfully mitigated competition from HBO, Amazon and others thus far, though competition is likely to continue to increase,” Power explains.

Baird is projecting Q3 revenue and adjusted EPS of $2.29 billion and $0.05, respectively.

The firm maintained a Neutral rating and $94 price target for Netflix stock.

Latest Ratings for NFLX

Oct 2016NomuraMaintainsBuy
Oct 2016SunTrust Robinson HumphreyMaintainsHold
Oct 2016Credit SuisseMaintainsNeutral

View More Analyst Ratings for NFLX
View the Latest Analyst Ratings

Posted-In: Baird William PowerAnalyst Color Price Target Top Stories Analyst Ratings Tech Best of Benzinga


Related Articles (AAPL + DIS)

View Comments and Join the Discussion!