Previewing Netflix, Inc.'s NFLX third quarter results that are due after the market closes today, MKM Partners said in a note it expects a strong quarter for revenue growth, driven by price increases.
Internet analyst Rob Sanderson sees the churn arising from price increases could make for another sloppy quarter of subscriber growth, The analyst noted that his net paid subscriber additions are estimate at 1.8 million compared to the consensus estimate of 2.1 million; He expects domestic subs in line at 400,000.
Q2 Miss & Stock
MKM Partners noted that significant misses on both international and domestic subscriber numbers triggered a 13 percent drop in shares after its last earnings release. This, according to the firm, is right in line with its absolute average over the last eight quarters.
Short-Term Risky, Long-Term Bullish
MKM Partners said its long-term bullish theme for the company is intact, although it sees the near-term fraught with risks. The firm recommends that in November expiry, 115 strike calls van be sold at $2.08 to partially finance 95/85 put spreads for $2.60 and a net debit of $0.52.
MKM Partners has a Buy rating and $130 price target on Netflix.
Shares of Netflix were down 2 percent at $99.52 early Monday afternoon.
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