Netflix's Higher Q2 Subscriber Outlook Offsets Small Q1 Sub Miss

Alan Gould of Rosenblatt Securities maintained a Neutral rating on Netflix, Inc. NFLX after the company's first-quarter earnings report in which the streaming video provider added fewer subscribers than expected.

According to Gould, Netflix's Q1 subscriber additions were short of expectations by 250,000, but the company's second-quarter subscriber guidance was 750,000 higher than expected. Combined, Netflix is expected to add 500,000 more subscribers than expected, which may imply Q2 guidance is "a bit conservative."

Moreover, Netflix ended March with 98.75 million subscribers and the company expects to pass the 100-million milestone as soon as this weekend, which also adds to the conservative nature of the guidance.

Shares 'Appropriately Valued' At $155

Gould also offered a longer-term approach to how he values Netflix's stock. Specifically, by 2025 the analyst expects Netflix to boast over 240 million subscribers worldwide and revenue of $40 billion. The company's earnings per share are expected to grow at an almost 20 percent compounded annual growth rate through 2025 and hit $12 per share.

However, even when factoring in Netflix's status as a major disruptor in TV consumer behavior, the analyst believes that the stock is "appropriately valued" at close to $155 per share.

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