- Netflix shares slipped early Friday after the streaming giant reported fourth-quarter sales that fell slightly short of expectations.
- But the vast majority of Wall Street analysts were bullish following the report.
- Shares were up 32% so far this year.
- Watch Netflix trade live here.
At least six Wall Street firms, including Goldman Sachs, JP Morgan, and Morgan Stanley, raised their price targets on the stock, reiterating their optimistic views.
Netflix beat analysts’ expectations when it came to earnings per share and estimates for its global paid-net-subscriber additions – a key gauge of the platform’s growth. The company saw 8.8 million paid net additions, higher than Wall Street’s expectation of 7.6 million.
Many analysts cited the company’s most recent price hike, announced earlier this week, as a reason to stay bullish on the company and its growth potential. Others pointed to the platform’s content stable in the fourth-quarter.
Here’s a selection of post-earnings commentary from analysts:
Price target: $US435 (from $US425)
“Strong 4Q & Early 1Q Sub Momentum Confirmed, Offset Modestly by Price Increase,” analysts led by Doug Anmuth wrote.
“On the heels of NFLX’s US & (partial) LatAm price increase announced earlier this week, 4Q18 results confirmed strong momentum exiting the year & into 2019. NFLX posted 11.4M total net adds in 4Q – 21% above the company’s forecast & well above Street expectations closer to 10M -w/upside in both the US & Int’l.”
RBC Capital Markets
Price target: $US480 (from $US450)
“Global Paid Sub Growth continues to accelerate,” analysts led by Mark Mahaney wrote in their note called, “Take Off The Blindfold.”
“Pulling of Pricing Lever should be successful. Means Accelerating Revenue Growth & Operating Margin Expansion. Long Term thesis fully Intact.”
They added: “Netflix offers a truly compelling value proposition with global appeal. So compelling that Netflix is embarking on what is likely to be its 4th successful price increase in the last five years. So global that Netflix now has 140MM global paid subs – with 80MM of those overseas – and its Paid Sub Adds are likely to increase for the 7th consecutive year.”
Price target: $US420 (from $US410)
Bullish analysts led by Eric Sheridan said they believe three key narratives should continue driving the stock’s performance.
“1) continued strong paid subs momentum in both US and int’l; 2) content success (now with some engagement disclosure) demonstrates how investing in content drives a ‘flywheel’ of engagement, sub growth & new content creators looking to partner; & 3) potential for scale of revenue (driven by pricing & subs growth) against content investments to cause a positive inflection in FCF trendline in 2020 and beyond. In addition, we see key investor debates around competition, margin/FCF evolution & runway for growth as better understood after NFLX’s marked underperformance in 2H18.”
Price target: $US450 (from $US420)
Analysts led by Heath Terry said the fourth-quarter’s global content slate, distribution partnerships, and marketing drove the platform’s global total net additions.
“As Netflix subscriber adds continue to exceed expectations and it approaches an inflection point in cash profitability, we believe shares of NFLX will continue to significantly outperform.”
Price target: $US450 (from $US430)
“4Q results and the 1Q guidance, at a high level, reinforce the investment thesis on NFLX shares – specifically, accelerating net additions, pricing power, and rising visibility into the path towards FCF generation,” analysts led by Benjamin Swinburne told clients.
Bank of America
Price target: $US450 (from $US440)
“Given strong net adds growth trends in 4Q and 1Q guidance for continuing subscriber growth with higher pricing, NFLX should alleviate most investor concerns around its growth trajectory,” analysts led by Nat Schindler told clients.
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