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Netflix 'Will Likely Be A Massive FCF Producer By 2018'

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Netflix, Inc. (NASDAQ: NFLX) reported its Q3 revenue, EBIT and subscriber additions ahead of expectations. Although the company is currently a net cash user, it would likely become “a massive FCF producer” by F2018, Loop Capital Markets’ David W. Miller said in a report. He maintained a Buy rating on the company, while raising the price target from $125 to $133.

Netflix reported its Q3 revenue at $2.29 billion, marginally above the consensus estimate of $2.28 billion. EBIT came in at $106.0 million, substantially higher than Loop Capital’s estimate of $69.2 million. The company’s GAAP EPS was $0.12, beating Loop Capital’s and consensus estimates of $0.06.

Impressive Performance And Guidance

As of September 30, the company’s global streaming subscriber base stood at 86.8 million, well ahead of Loop Capital’s projection of 85.5 million. Of these, 47.5 million were domestic subs and 39.3 million were international subs.

“In terms of categorical break-down, NFLX's U.S. streaming net additions of 0.37mm easily surpassed our projection of 0.30mm, while the International streaming side posted Q3 net additions of 3.2mm, crushing our projection of 2.0mm,” analyst Miller wrote.

Netflix also guided to impressive subscriber adds for Q4. The company’s EBIT guidance of $125.0 million and EPS guidance of $0.13 were meaningfully higher than the pre-call consensus projections.

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Latest Ratings for NFLX

DateFirmActionFromTo
Dec 2016Evercore ISI GroupUpgradesSellHold
Nov 2016Brean CapitalInitiates Coverage OnBuy
Nov 2016Loop CapitalMaintainsBuy

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