Market Overview

7 Reasons Why The Street Likes The Netflix Q2 Beat

Share:
7 Reasons Why The Street Likes The Netflix Q2 Beat

After a stellar Q2 earnings report, Netflix, Inc. (NASDAQ: NFLX) shares traded 13 percent higher during Tuesday’s trading session. Baird analyst William Power took a deeper look into the earnings beat and ended up raising his price target on Netflix from $140 to $175.

“Netflix handily beat Q2 subscriber results with Q3 guidance also above estimates, driven by significant international upside and solid U.S. results. Driven by an impressive 2H'17 content lineup, we expect continued strong growth and are raising our estimates,” Power said.

7 Notable Highlights From Q2 Earnings Call

  1. Netflix is performing extremely well internationally with net additions of 4.14 million smashing estimates (expectation was 2.6 million).
  2. Netflix is seeing strong growth in the U.S., too. U.S. net additions were 1.07 million which exceeded the 600,000 estimate.
  3. New original content and new seasons of "House of Cards" and "Orange is the New Black" likely helped drive upside.
  4. Netflix’s financials were solid in Q2.
  5. Q3 financial guidance was higher led by an increase in estimates for consolidated revenue and adjusted EPS. Additionally, management expects positive international contribution profit for the year.
  6. Free cash flow was worse in Q2, but nobody really cared. Management also stated, “we expect to be FCF negative for many years."
  7. Movie production could be another growth catalyst. “Netflix plans to launch 40 movies this year and is pushing for its movies to be launched simultaneously. If movie production continues to accelerate, that could steepen FCF losses, in addition to potentially disrupting the theater/movie industry,” Power said.

To read the latest and exclusive financial news, check out the Benzinga Pro news wire.

By Peabody Awards [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Latest Ratings for NFLX

DateFirmActionFromTo
Dec 2019DowngradesHoldUnderperform
Dec 2019DowngradesBuyNeutral
Nov 2019DowngradesMarket PerformUnderperform

View More Analyst Ratings for NFLX
View the Latest Analyst Ratings

Posted-In: Baird William PowerAnalyst Color Price Target Analyst Ratings Best of Benzinga

 

Related Articles (NFLX)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SFIXStifel NicolausMaintains32.0
AMBairdMaintains6.0
LPIStifel NicolausMaintains5.6
BORRGoldman SachsInitiates Coverage On
ROADBairdMaintains20.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

12 Biggest Mid-Day Losers For Tuesday

Cavium Among Preferred Semiconductor Stocks Heading Into Earnings Season