Some Things To Consider Ahead Of Netflix's Q4 Earnings

Netflix, Inc. NFLX is scheduled to report its fourth quarter earnings Jan. 22, which may convince some of Wall Street's neutral or bearish analysts into becoming positive.

The Analyst

Baird Equity Research's William Power maintains a Neutral rating on Netflix's stock with an unchanged $190 price target.

The Thesis

Netflix is likely to report solid U.S. subscriber growth metrics and strong growth in the international segment, Power said in a note. At the same time, investors need to be mindful of the competitive landscape in the streaming video market on top of Netflix's "significant ongoing" cash burn.

Here is a summary of what the analyst is modeling for Netflix's earnings report:

U.S. penetration rose 200 basis points to 47.3 percent;
Netflix likely added 1.25 million total U.S. net additions which would mark a decrease from 1.93 million a year ago;
Netflix is likely to report 5.05 million total net additions in the international market versus 5.1 million a year ago;
2017's price increase is likely to have a "muted impact" but could increase churn and impact margins; and
Netflix is projected to report total Q4 revenue of $3.3 billion, EPS of 41 cents, contribution margin of 34.4 percent (down from 38.2 percent last year).