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Wall Street Previews Netflix's Q4 Earnings: Rising Subscriber Numbers Drive Bullish Projections

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Wall Street Previews Netflix's Q4 Earnings: Rising Subscriber Numbers Drive Bullish Projections
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Netflix, Inc. (NASDAQ: NFLX) added more than 5 million users during the third quarter, which was stronger than expected and has investors hopeful the momentum carried over into the fourth quarter. Here's a preview of what two notable Wall Street analysts are saying ahead of Netflix's Jan. 22 earnings report.

The Analysts

Loop Capital Markets' David Miller maintains a Buy rating on Netflix's stock with a price target boosted from $241 to $252.

The Buckingham Research Group's Matthew Harrigan maintains a Buy rating on Netflix's stock with a price target boosted from $235 to $251.

Loop: Not Too Late To Buy

Netflix is projected to earn 44 cents per share in core EPS in the fourth quarter on revenue of $3.28 billion and report EBIT of $249.2 million, Miller said in a research report. The streaming service is also expected to report a net subscriber addition of 6.21 million, with 1.29 million net U.S. additions, implying it ended 2017 with a 23.3-percent subscriber growth rate. The quarter should also show a "measurable rise" in average selling price from the October price increase, Miller said.

Netflix's status as a "best idea for 2018" remains unchanged ahead of the print, Miller said. The fourth quarter and subsequent reports are expected to show a "level of operating leverage more magnified than it has [been] in the past."

Looking forward to just one year from now, Miller said he expects Netflix to show 133.3-percent EBIT growth and 123.9-percent EBITDA growth by the end of 2018, justifying the stock's valuation. 

Buckingham: Incrementally Positive

Buckingham Research Group projects that Netflix will earn 41 cents per share in the fourth quarter on revenue of $3.273 billion, with related operating profit rising 54.8 percent to $238 million, Harrigan said.

Netflix likely added 6.2 million global streaming members, with more than 5 million of those coming from international markets.

Netflix remains an industry best in combing content with technology given its advanced artificial intelligence, ranking and personalization — which is vital for management to better evaluate future content spending, Harrigan said. 

Buckingham also raised its full fiscal 2018 estimates and now expects Netflix to earn $2.49 per share, up from a prior estimate of $2.37 per share. The revision is attributed to U.S. tax legislation, which should lower the company's tax rate from 25 percent to 21 percent, Harrigan said. 

Elsewhere On The Street

Here's a summary of any rating and price change reiterations or changes ahead of Netflix's print.

  • KeyBanc's Andy Hargreaves maintains an Overweight rating on Netflix's stock with a price target boosted from $230 to $270.
  • Rosenblatt Securities' Alan Gould maintains a Buy rating on Netflix's stock with a price target boosted from $225 to $265.
  • Cowen's John Blackledge maintains an Outperform rating on Netflix's stock with a price target boosted from $215 to $240.
  • Stifel's Scott Devitt maintains a Buy rating on Netflix's stock with an unchanged $235 price target.
  • B Riley FBR's Barton Crockett maintains a Neutral rating on Netflix's stock with an unchanged $211 price target.

Price Action

Shares of Netflix were up 0.06 percent at $220.46 at the close Friday. 

Related Links:

Some Things To Consider Ahead Of Netflix's Q4 Earnings

Wall Street Praises Netflix's Outlook As Price Increases Begin To Take Effect

Photo courtesy of Netflix. 

Latest Ratings for NFLX

DateFirmActionFromTo
Jun 2018Monness Crespi HardtMaintainsBuyBuy
Apr 2018Bank of AmericaMaintainsBuyBuy
Apr 2018Canaccord GenuityMaintainsBuyBuy

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