Netflix Analysts: The Day After

Netflix, Inc. NFLX reported Q1 earnings on Wednesday and the stock responded by soaring over 12 percent in the after-hours session.

The stock recently traded at $543.41, up 14.29 percent.

Wall Street analysts commented on the stock. Below are highlights along with current ratings and price targets.

Cantor Fitzgerald - Buy, $580 price target.

“Netflix reported very strong 1Q:15 results, with the all-important subscriber metrics again exceeding expectations for both domestic and international segments. Streaming sub guidance for 2Q:15 is 25 percent ahead of consensus, driven by international growth. With 60M+ streaming subs, a superior value proposition and a gradual but persistent shift to OTT, we remain constructive on NFLX, raising our PT to $580 from $500. Mgt is seeking shareholder approval for an increase in authorized shares to recommend a stock split.”

FBR & Co - Outperform  $900 price target

“Netflix added 4.88 million global new streaming subs (2.28 million U.S., the rest international), topping its guidance by 21 percent and putting it on track, we estimate, for over 5.6 million U.S. net adds this year, and potentially over 10 million internationally, with a big market expansion slated for the second half.

"The international ramp will drive up international losses this year and next, as country content is licensed in advance of sub acquisition; but later estimates go up, on higher sub growth. At steady-state content spending, each 1 million in subs drives $100 million of annual operating profit, and each $1 price hike drives $750 million of annual profits.”

Related Link: Netflix Vs. HBO Now Vs. Sling TV: Are They Competitive Or Complementary?

Sterne Agee - Neutral, no price target

“Our longer-term model suggests that by 2020, total domestic streaming subscribers will reach 72M (up from 39M at the end of 2014) or a CAGR of 11 percent; international subscribers will reach ~78M (up from 18M at the end of 2014) or a CAGR of 28 percent. Our revenue, EPS estimates for 2020 are approximately $14B / $24, up from $5.5B / $3.69 (adjusted) or a CAGR of 17 percent / 37 percent, respectively. Assuming a 30x 1-year forward EPS multiple in early 2020 and discounting it back at 10 percent provides a fair value of around $500. Given the current stock price and based on the discussion above, we are maintaining our Neutral rating.”

Bank of America - Underperform, $350 price target

“Strong net sub adds in the U.S. are encouraging, but bull investors are likely to focus on the int’l story. NFLX will eventually reach a saturation point in the U.S. as the market is limited to the ~120mn households, but internationally Netflix’s potential TAM is many times larger. This focuses investors on the upside potential in Int’l if Netflix can overcome barriers like local competition, different consumption habits, local content acquisition costs, and distribution rights. For now we believe Int’l will continue to weigh on the business generating a $101mn drag next quarter.”

Stifel - Buy, $650 price target

“While Netflix's investments in content / international expansion should weigh on margins this year, its efforts appear to be paying off. We increase our 2Q:15 streaming subscribers to 64.9mm (from 63.1mm previously) to reflect Netflix's subscriber beat and positive outlook.”

Citi - Buy, $584 target price

“We modestly lower our CY15 revenue estimates due entirely to lower Int’l ARPU owing to FX headwinds. For 2Q15 we model Domestic net adds of 600k, $1,024mn in Domestic revenue, 1.9mn in Int’l net adds, and $450mn in Int’l revenue (vs. 513k, $1,011mn, 1.6mn, and $470mn previously). Our 2Q15 EBITD estimate declines to $112mn due to further investments in early international markets. For CY15 we forecast 5.5mn Domestic net adds and 10.6mn Int’l net adds.”

Baird - Outperform, $610 price target

“Yesterday after the close Netflix reported strong Q1 results, highlighted by strong U.S. subscriber results, continued international progress and plans for a stock split. We are also positive on the strong Q2 content lineup, which should continue to drive strong near-term results. Netflix remains one of our top ideas, driven in part by the new originals roadmap and international growth opportunities. Reiterate our Outperform rating and raising our target price from $505 to $610.”

BMO Capital Markets - Market Outperform, $500 price target

“We are raising our price target to $500 (from $450), primarily reflecting higher international subscriber estimates versus our prior expectations. We believe Netflix continues to lead the charge in the shift toward internet TV and expect the company’s exclusive content to drive subscriber additions and reduce churn, helping to drive significant EPS expansion following an extended period of heavy investments.

"However, we remain Market Perform on NFLX shares, as we believe current price levels are adequately discounting a sustained period of strong subscriber growth and margin expansion.”

Oppenheimer - Outperform, $610 price target

“We believe Originals are driving better financial results, as exclusive programming improves efficiencies in content spend by lowering churn. As a result, US contribution profit was 8 percent above Street, and management plans to leverage higher domestic profit to accelerate Int'l growth. Therefore, 2Q global net-sub guidance is 25 percent above the Street. 1Q Int'l revenue 2 percent below guidance, as FX caused -18 percent/-30 percent drag on Int'l revenue/contribution margin.

"However, we believe accelerating Int'l subs should alleviate investor concerns from not hedging currency. In our opinion, NFLX is the best global play in the shift to multi-platform video content.”