Everything Wall Street's Saying About Netflix Today

Shares of Netflix, Inc. NFLX fell more than 10 percent after the video streaming service missed its second quarter international subscriber guidance by 40 percent, despite reporting strong results for the first quarter. Netflix earned $0.06 in the first quarter, topping the Street view by 3 cents, while quarterly revenue of $1.958 billion fell short of Street's consensus estimate of $1.97 billion. Net additions in first quarter stood at 6.74 million, higher than 4.88 million in the year­ago period. The company said 42 percent of its 81.5 million members are now outside of the US. Now, here comes the bad part. Netflix guided second quarter EPS of about $0.02 versus consensus estimate of $0.05 and projected 2 million international subscriber additions in the second quarter versus consensus view of 3.45 million. Read more: http://www.benzinga.com/news/earnings/16/04/7853018/netflix-misses-where-it-counts-international-subscriber-guidance-whiffs-#ixzz46HOtjNcK International subscriber outlook is a key metric for Netflix investors and when the company guided lower international subscriber additions, it led to a panic sell-off from investors. As such, shares were down 10 percent after-hours on Monday. Following is the Wall Street's take on the results of Netflix: Doug Anmuth of JPMorgan remain buyers of Netflix, saying "We don't view the light 2Q Int'l net adds guidance of 2M (vs. our 3.25M & consensus 3.50M) as thesis-changing." Anmuth said Netflix has shown historical seasonality in the second quarter Int'l net adds in previous years, and still thinks the 2Q number could be "conservative" given the global rollout. He recommended investors buy the weakness in NFLX shares. Anmuth reiterated his Overweight rating on NFLX shares, but cut the price target to $126 from $139. Goldman Sachs remains Buy-rated on Netflix, but trimmed the price target by $10 to $120. "With NFLX trading at roughly 32X 2017E EV/EBITDA on 70% 3-year EBITDA growth compared to the sector at 16X on 25% growth, and the potential for further revenue growth acceleration as Netflix replicates its model globally we believe the risk/reward in owning NFLX is favorable," analyst Heath Terry wrote in a note to clients. Benjamin Swinburne of Morgan Stanley too kept his Overweight rating on Netflix, and considers the pull back as a buying opportunity for long-term investors. However, he cut the price target to $125. "We expect 3Q net adds to ramp, and focus on key int'l content debuts including France's Marseille May5th," Swinburne noted. In addition, Cantor Fitzgerald remain buyers of Netflix, with $140 price target, as its long-term thesis around Netflix becoming the premier global provider of OTT content with unfair competitive advantages remains unchanged. Citi analyst Mark May, who has a Neutral rating on NFLX shares, lowered his price target by $10 to $106 due to the lower-than-expected int'l sub guidance. The analyst views the catalysts and the upside potential as "less favorable" this year, especially with "the likely negative cash flow for at least the next two years." SunTrust analyst Robert Peck expressed "surprise" on the company's international subscriber outlook miss despite new broadband additions and wondered if there is any other factor causing the slowdown. Peck maintained his Neutral rating and $115 price target on NFLX shares. Peck noted: "2Q paid sub add guidance of 2.3m is materially below consensus at 3.5m, which is surprising given the 150m new broadband households added to the footprint in 1Q. Guidance implies a sharp deceleration in growth in 2Q. We are unclear if the company is being conservative or if there is something more endemic that is causing the slowdown." Bernstein maintained its Underfperform rating and $62 target price on the stock. "The key uncertainties are whether the international subscriber number ten years from now is in the rough order of 70 million (as we believe) or well in excess of 100 or 150 million (as many others do). In fact, there are investors who believe that Netflix could – in the fullness of time – reach many hundreds of millions of subscribers (we disagree!)," analyst Carlos Kirjner said. Among others, Barclays maintained its Equal Weight rating on the stock with $115 price target. Shares of Netflix fell 10.48 percent to $97.04.