A Netflix Earnings Preview: Q1 Guidance Will Be In Focus

Netflix, Inc. NFLX is scheduled to report its Q4 2016 results on January 18. With the exception of China, Netflix is now “fully launched in every country on the planet that has high-speed broadband infrastructure,” Loop Capital Markets’ David Miller said in a report.

He maintained a Buy rating on the company, with a price target of $151.

Q4 Preview

For Q4, Miller expects Netflix to report aggregate revenues of $2.48 billion, cumulative EBITDA of $154.5 million and core non-GAAP EPS of $0.14. The consensus aggregate revenue and EPS estimates are at $2.47 billion and $0.13, respectively.

Miller expects Netflix to report Q4 net subscriber adds of 5.07 million, with net U.S. streaming additions of 1.47 million, net International streaming additions of 3.79 million, and the loss of 0.19 million DVD only members.

“We kindly remind investors that NFLX does not provide guidance on DVD-only attrition, but we feel our Q1 estimate of negative 0.16mm is reasonable given historical patterns,” the analyst wrote.

“As with Q3 2016, ASP should improve incrementally due to the strategic move last year to keep the standard definition one-screen price at $7.99, but raise the high-def two-screen price by $1.00, to $9.99, still a huge value by all accounts,” the analyst added.

Q1 Guidance

Miller expects Netflix to guide to revenues of $2.58 billion, EBIT of $167.5 million and non-GAAP EPS of $0.18 for Q1 2017. The company is likely to project U.S. streaming margin contribution at 30.6 percent and international streaming margin of -7.9 percent.