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Goldman Sachs Raises Netflix Price Target Ahead Of Q1 Print

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Goldman Sachs Raises Netflix Price Target Ahead Of Q1 Print
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Netflix, Inc. (NASDAQ: NFLX) is scheduled to report first-quarter results April 16 after the close. The print is likely to come in ahead of consensus estimates due to a strong content slate, new distribution partners and returns from marketing investments, according to Goldman Sachs.

The Analyst

Goldman Sachs' Heath Terry maintains a Buy rating on Netflix's stock with a price target lifted from $315 to $360.

The Thesis

Terry is modeling for the following metrics in Netflix's Q1 report. (See the analyst's track record here.) 

  • 1.7 million net subscriber additions in the U.S. market and 5.6 million international net subscribers versus Netflix's guidance of 1.45 million and 4.9 million, respectively.
  • Average revenue per user growth of 10.5 percent domestically and 20.5 percent internationally.
  • Revenue of $3.7 billion.
  • Incremental marketing spend that will result in marketing deleverage of 320 basis points versus last year.
  • Net income of $284.1 million.
  • Earnings per share of 63 cents.

Beyond Q1, Terry said he expects the following from Netflix: 

  • Cash burn that grows from $2 billion in 2017 to $3 billion for the full year 2018.
  • 6 million net adds in the second quarter versus the consensus estimate of 5.2 million net adds.
  • Longer-term subscriber growth and profit that exceeds consensus estimates.

Price Action

Shares of Netflix were trading higher by 3.75 percent at the time of publication Wednesday morning.

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Latest Ratings for NFLX

DateFirmActionFromTo
Nov 2018BuckinghamUpgradesUnderperformBuy
Oct 2018Raymond JamesMaintainsOutperformOutperform
Oct 2018Imperial CapitalMaintainsOutperformOutperform

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