Piper Jaffray Comments on Netflix

Piper Jaffray has published a report on Netflix Inc. NFLX. In the report, Piper Jaffray wrote, "Netflix reports Q2 results on Monday (7/25). We see potential for Q2 revenue and EPS upside based on better subscriber additions and gross margins. Q2 web traffic data from ComScore suggests that Netflix sub adds are tracking above estimates, implying a slight revenue beat. For gross margin, while streaming content expense is going higher, a GM decline of 530bps q/q from Q1 to Q2, as we have modeled, may be overly conservative. Guidance for Q3 is dependent on several factors, most notably the timing of the launch of Netflix in new geographies (level of intl launch expense that falls into Q3 vs. Q4) and the impact of the recent pricing changes. While we believe the momentum in the domestic business would suggest an outlook ahead of consensus, the overall Q3 company outlook is difficult to forecast due to international roll-out and the changes in plan pricing." Piper Jaffray rated Netflix Overweight with a price target of $330.00.