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Netflix To Continue Growth With $1 Billion More Content In 2017

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Netflix To Continue Growth With $1 Billion More Content In 2017
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Netflix, Inc. (NASDAQ: NFLX) reported robust Q3 results, ahead of the consensus expectations.

Goldman Sachs’ Heath P. Terry maintains a Buy rating on the company, while raising the price target from $115 to $140.

Q3 Beat

Terry mentioned that Netflix reported its revenue for Q3 at $2.29 billion, representing 32 percent year-on-year growth, ex-FX, and ahead of the consensus forecast of $2.28 billion.

Domestic and international subscriber growth also came in above the consensus, and the company guided to Q4 ahead of the consensus forecasts as well.

GAAP EPS for Q3 was $0.12, again beating the consensus of $0.06, and the analyst believes that the outperformance for the quarter reflects financial and subscriber leverage in content for the company.

Related Link: Michael Pachter Says Netflix's Valuation Is "Unwarranted," Raises Price Target To $60

$1 Billion In Content

“With an incremental $1+ billion in content spend next year and a larger addressable base, we believe the potential for growth acceleration in subscribers, revenues, and profits remains high,” Terry stated.

Domestic streaming net additions stood at 0.5 million, ahead of the guidance of 0.3 million, while international streaming net adds came in at 3.2 million, again beating the guidance of 2 million.

Guidance

For Q4, management guided to domestic net additions of 1.45 million, with 3.75 million international net additions, ahead of the consensus forecasts.

For Q3, adjusted EBITDA margins grew to 7.2 percent, driven by contribution margins in the United States reaching 36.4 percent, while international losses improved to 8 percent of revenue, from the earlier 13 percent.

In Tuesday's pre-market session, Netflix was up 18.84 percent at $118.60.

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Latest Ratings for NFLX

DateFirmActionFromTo
Nov 2016Brean CapitalInitiates Coverage OnBuy
Nov 2016Loop CapitalMaintainsBuy
Oct 2016NomuraMaintainsBuy

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