Netflix Q4 Earnings Beat: The Sell-Side Weighs In

Netflix, Inc. NFLX shares jumped more than 10 percent Tuesday after the company’s fourth-quarter earnings report blew expectations out of the water.

A number of Wall Street analyst weighed in on Netflix following the report.

Voices From The Street

Bank of America analyst Nat Schindler said the huge subscriber beat indicates Netflix’s recent pricing increase isn't adding to churn rates.

“Despite great success growing subscribers, we see continued growth internationally and additional leverage with pricing increases over the next 5-10 years,” Schlindler wrote.

BMO Capital Markets analyst Daniel Salmon said Netflix is clearly still firing on all cylinders. “The focal point for disruption of the traditional TV ecosystem, we believe NFLX shares properly value the opportunity and the inherent risks of this position and would look for incremental news (e.g., faster-than-expected international traction) to become more positive on the stock.”

Morgan Stanley analyst Benjamin Swinburne said the Q4 report was the exclamation point on a banner year for Netflix.

“We now forecast Netflix delivering over +23mm global net adds in 2018E (vs. over 21mm previously) based on continued strong penetration gains across the US and internationally,” Swinburne wrote.

Owning The Competition

KeyBanc analyst Andy Hargreaves said Netflix is expanding its competitive advantage over a growing number of streaming video rivals.

“We believe Netflix's global reach and data feedback loop provide leading investment efficiency, while its investment scale is growing at a level that others appear unable to match,” Hargreaves wrote.

Tigress Financial analyst Ivan Feinseth said Netflix’s brand strength has made it somewhat immune to the competition.

“For now, the trend is very strongly up, however the stock is getting extended and very highly valued so I would look to sell into strength,” Feinseth wrote.

Loop Capital analyst David Miller said the best part about Netflix’s report was the Q1 guidance.

“NFLX guided the Q1 domestic sub category at 1.45mm, ahead of our pre-call view of 1.43mm, while Q1 International subs are expected to come in at 4.90mm, easily ahead of our precall view of 3.59mm,” Miller wrote.

Ratings And Price Targets

Wall Street is mostly bullish on Netflix’s stock following the blowout quarter, but some firms are more bullish than others:

• Bank of America has a Buy rating and $300 price target.
• BMO has a Market Perform rating and $250 price target.
• Morgan Stanley has an Overweight rating and $275 price target.
• KeyBanc has an Overweight rating and $300 price target.
• Loop Capital has a Buy rating and $285 price target.

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