Netflix Lacks Lack Near-Term Catalysts, Credit Suisse Says After Q2 Report

Following Netflix Inc’s NFLX second-quarter results and guidance, Credit Suisse lowered its estimates for 2020 and 2021 and said there seems to be a lack of near-term catalysts. 

The Netflix Analyst: Douglas Mitchelson downgraded Netflix from Outperform to Neutral and cut the price target from $550 to $525.

The Netflix Thesis: Netflix has benefited from its strong repertoire of content and the coronavirus crisis-driven increase in viewership of video streaming services, Mitchelson said in the Friday downgrade note. (See his track record here.)

The company is likely to witness the following going ahead, the analyst said. 

• Subdued subscriber growth in the back half of 2020
• Tough comparisons in the first half of 2021
• A tapering of interest as economies reopen

The weekly subscriptions chart in Netflix’s second-quarter letter already shows a slowdown in subscriber growth, he said. 

Mitchelson reduced the 2020 and 2021 estimates for subscriber net adds by 5.9 million to 32.9 million and by 1.2 million to 28.3 million, respectively. The Credit Suisse earnings estimates for these years have been lowered by 15 cents to $6.07 per share and by 21 cents to $8.82 per share, respectively.

NFLX Price Action: Shares of Netflix had nosedived almost 8% to $487.53 at the time of publication Friday.

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Photo courtesy of Netflix.