Streaming giant Netflix (NFLX) is due to release its first quarter results for this year on April 17. The stock is notoriously volatile with prices up 65% in the past year, but down from $148 to $143 in the past month. We decided to check in and see what the top-rated analysts on Wall Street are forecasting for this quarter’s earnings results and beyond.
From TipRanks’ earnings calendar we can immediately see that the consensus EPS (earnings per share) estimate for this quarter is $0.37 vs the same period last year of $0.06- giving some indication of how quickly the company has grown. Tomorrow we will see whether Netflix beats or misses this expected EPS- a beat could see shares soar while a miss would likely lead to a price pullback.
Top Wall Street analysts Mark Mahaney from RBC Capital and Cantor Fitzgerald’s Kip Paulson are both exactly on-line with consensus with their $0.37 forecasts. Specifically, Mahaney predicts total revenue of $2.64 billion, with domestic streaming subscriber additions of 1.50 million and international streaming subscriber additions of 3.70 million.
Looking forward Mahaney notes that the June quarter is “a seasonally soft” quarter for Netflix but adds that “unambiguously positive” US survey results from RBC’s quarterly survey show record usage levels (55% now use Netflix to watch Movies & TV shows) and record-high satisfaction levels.
TipRanks reveals that five-star Mark Mahaney- one of the financial accountability engine’s top 25 tech analysts– has an impressive track record of Netflix ratings:
Meanwhile Kip Paulson says “It’s all about international subs from here”. He believes that while domestic subscriber growth will be limited to the single digits, potential for international growth is far more promising, adding, “And internet/broadband penetration should only rise over time.”
However, not all analysts are so bullish on Netflix. For example, Barton Crockett from FBR Capital strikes a cautious tone as he evaluates NFLX’s ability to maintain such rapid expansion, especially in the light of rivals such as Amazon Prime and Hulu: “We see Netflix currently at peak growth (in both subs and revenue growth), and that concerns us for a growth stock trading at 49x EV/ EBITDA and a P/E of over 100x. Bulls have spoken of Netflix as a replacement for the pay TV bundle. But consumer behavior says it is a supplement.”
Nonetheless the overall outlook is still strong- as reflected by the analyst price target- a crucial indicator of how far analysts believe the stock will move over the next 12 months. The average price target of $158 from only the best-performing analysts surpasses the $156 average price target from all analysts- and easily beats the $144 price target from Barton Crockett. If we compare this to the current share price of $143 this translates into a solid upside potential of 10.5% and 9% respectively.
The stock has a moderate buy consensus rating on TipRanks; in the last three months 20 top analysts have issued buy ratings on the stock while 11 top analysts gave the stock a hold rating.
Stay Tuned- Following the release of Netflix’s results tomorrow, we have Johnson & Johnson (JNJ) and Bank of America (BAC) on Tuesday with Visa (V) and Verizon (VZ) on Thursday and General Electric (GE) on Friday. TipRanks tracks stock recommendations from 4,550 Wall Street analysts on over 5,000 stocks, and you can find the latest top-rated analyst recommendations via the earnings calendar.