Here's what 4 analysts are saying ahead of Netflix's quarterly earnings — the first to show the impact of coronavirus

Netflix‘Love Is Blind’

Netflix is set to report its first quarter earnings Tuesday, one of the first releases to show the impact of the coronavirus pandemic on the streaming platform.

Shares of Netflix have gained 35% year-to-date through Monday’s close, outperforming the broader market and boosted in part by the coronavirus outbreak that’s kept millions of Americans at home. The streaming platform has been named in a number of “stay at home” baskets of stocks, slated as one of few companies to benefit from social-distancing to curb the spread of COVID-19

Here’s what analysts surveyed by Bloomberg expect:

  • Earnings per share (GAAP): $US1.64 expected
  • Revenue: $US5.74 billion expected

In addition, Netflix has recently released a slew of popular new content, including titles such as “Tiger King,” reality show “Love is Blind,” and the third season of “Ozark.”

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The new shows may have helped Netflix compete against other streaming services including Disney Plus – the pace of subscription cancellations on the platform declined in both February and March, according to data from subscription measurement and analytics firm Antenna, Business Insider’s Ashley Rodriguez reported. The rebound came after Netflix was hurt by the launch of Disney Plus last year.

In March, Netflix’s US registration website saw a surge in traffic, especially in the last three weeks of the month, according to data from analytics firm SimilarWeb. The spike coincides with the US going into lockdown mode amid the coronavirus pandemic.

Here’s what four analysts have to say about Netflix ahead of its earnings report:

1. Cowen: “Expect a strong quarter”

Price target: $US445

Rating: Outperform

“We expect a strong quarter driven by a solid slate of originals coupled with, a captive audience due to the COVID-19 pandemic,” a group of Cowen analysts led by John Blackledge wrote in a note April 15.

He continued: “Our view is supported by our positive proprietary 1Q20 survey data. We raised our US sub forecast modestly to reflect lower churn & higher gross adds in 1Q & FY20.”

“We view the increase in consumption, as well as positive 1Q20 survey data from our proprietary US consumer internet tracker as a positive for net adds, and we expect the benefit to subs to carry forward into the out years of our model.”

2. UBS: “Streaming video leader”

Price target: $US400

Rating: Buy

“Against a backdrop of global sheltering in place to address COVID-19, NFLX’s position as the streaming video leader (in terms of scale of subscribers and breadth of content) should be on display in its upcoming Q1’20 EPS report,” wrote Eric Sheridan of UBS in an April 15 note.

New and returning series should also boost performance. “On comparative basis, Netflix titles continue to perform well against the most recent seasons of network shows and original series from Hulu & Amazon,” Sheridan said.

He continued: “Notably, Tiger King: Murder, Mayhem, and Madness ranks third for peak search interest in the US ahead of Conversation with a Killer: The Ted Bundy Tapes S1. Ozarks S3 and Love is Blind both ranked within the top 15.”

3. Bernstein: COVID-19 boost could “set up 2021 very nicely for Netflix pricing”

Price target: $US487

Rating: Outperform

“After significant price increases in most markets throughout 2019, we never expected much pricing activity for Netflix in 2020. Now add to that COVID-19,” Todd Juenger of Bernstein wrote in a note April 8.

“While positive for Netflix engagement and subs – it also creates a difficult environment for any company to raise prices, despite the increased usage,” he said.

He continued: “This could, however, set up 2021 very nicely for Netflix pricing, depending on the macro- economic recovery path. The increased engagement and appreciation for Netflix that a growing number of consumers will experience in 2020 could make it that much easier for Netflix to successfully pass through pricing increases in 2021.”

4. Canaccord Genuity: “Longer-term COVID-19 should be a tailwind”

Price target: $US450

Rating: Buy

“As consumers around the world spend more time indoors, streaming video is certainly seeing a boost, and the cancellation of live sports has created an opening for SVOD platforms to capture a higher share of entertainment time,” Canaccord Genuity’s Maria Ripps wrote in an April 15 note.

“At a time when some competitors may be working through production delays for shows that are instrumental to their recent and upcoming launches, Netflix’s vast library of original and licensed content sets it apartment competition.”

She continued: “The recent stock performance is pricing in a healthy subscriber trajectory over the near-term, and we think that Netflix will see a boost to new subscriber addition along with a reduction of churn, resulting in upside to Q1 and a strong Q2 outlook, while longer-term COVID-19 should be a tailwind in the transition from legacy bundles to SVOD platforms.”

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