Netflix has been a Wall Street favorite throughout the year, with the company's shares more than doubling since the start of 2015 to hold the title of top performing stock in the S&P 500. The firm reported earnings last night, and beat on a number of important metrics such as the number of subscribers, sending shares up more than 10 percent pre-market.
The company's Internet TV service grew to 65.6 million subscribers in the second quarter, with many attributing that growth to the popularity of Netflix's original series such as "Orange is the New Black" and "House of Cards." Analysts were also keeping a close eye on the growth in subscribers outside of the U.S. market. Netflix also beat on this measure, with subscribers jumping by 2.37 million to 23.3 million internationally vs analyst estimates of a 1.94 million increase.
Analysts covering the stock are sending out updated research to their clients this morning. Here's a roundup of what they're saying.
Bank of America Merrill Lynch's Nat Schindler, Justin Post, and Jason Mitchell:
Despite 2Q being NFLX’s seasonally weakest quarter, NFLX reaccelerated net sub additions y/y likely due to strong slate of 2Q content releases including Daredevil, Sense8, Grace and Frankie, and Orange is the New Black Season 3...We reiterate our Buy rating and raise our PO from $103 to $121 based on our sum-of-parts valuation.
Macquarie's Tim Nollen and Ankesh Agarwala:
Solid beat.Netflix Q2 subs and contribution margins came in well above guidance, and EPS of $0.06 beat our and consensus $0.04; pre-stock split (NFLX split 7:1 today) EPS was $0.42 vs our $0.28 estimate...We are raising our DCF-based target price to $113.
Morgan Stanley's Benjamin Swinburne and Thomas Yeh:
The 2Q results and 3Q guidance continue to show growing demand for Netflix product, as subscriber metrics exceeded 2Q guidance and 3Q expectations. Importantly, the pre-'14 int'l markets are now all profitable, and visibility into long-term profits is improving...Base case to $125 (from $107.50)
Pacific Crest's Andy Hargreaves and Evan Wingren:
We recommend owning NFLX. Q2 results beat estimates and support the view that Netflix is accelerating away from competition. While we believe recent appreciation has hurt the risk/reward around the shares, the company's dominant position and pending global launch warrant it being a core holding.
Piper Jaffray's Michael J. Olson and Yung Kim:
We maintain our Neutral rating, with a positive long-term bias, based on our analysis that suggests EPS growth from '17-'20 will average ~99%. NFLX, however, has been a volatile name in recent years and while we expect the general trend to be "up and to the right," we also expect periodic pullbacks and would encourage investors to take advantage of more attractive entry points. PT of $96.
Cowen and Company's John Blackledge, Thomas Champion, and Nick Yako:
With expectations high going into 2Q, NFLX managed to trounce expectations with a stellar 2Q subs beat in the US and Int'l driven by improving content and better brand recognition and strong 3Q15 guide. With the Original content strategy clearly paying off, we see a lot to like. We raised our long-term sub and ARPU forecast, as a result Price Target to $150 (vs. $109); reiterate Outperform.
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