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Netflix Target Price Up Ahead of Q2 Earnings: ETFs in Focus
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Netflix (NFLX - Free Report) is set to release second-quarter 2023 results on Jul 19 after market close. Being the world's largest video streaming company, it is worth taking a look at its fundamentals ahead of the results.
Netflix shares rallied to their highest price in more than a year on Jul 17, after a series of analysts lifted the target price on the stock. The stock has outperformed the broader industry, having gained 39% over the past three months compared with the industry’s average gain of 4.3%. The solid trend might continue, given that Netflix has reasonable chances to beat estimates this quarter. Additionally, Netflix has seen favorable earnings estimate revision activity of late, which is generally a precursor to an earnings beat.
As a result, ETFs with the largest allocation to this streaming giant, like MicroSectors FANG+ ETN (FNGS - Free Report) , Invesco Dynamic Media ETF , ProShares Nasdaq-100 Dorsey Wright Momentum ETF (QQQA - Free Report) , First Trust S-Network Streaming & Gaming ETF (BNGE - Free Report) and Pacer BioThreat Strategy ETF (VIRS - Free Report) , are in focus.
Earnings Whispers
Netflix has an Earnings ESP of +2.11% and a Zacks Rank #3 (Hold). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The online video-streaming giant saw positive earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock (read: Ride the Streaming Wave With Netflix ETFs).
Though Netflix is expected to record an earnings decline of 11.9%, revenues are likely to increase 3.6% for the to-be-reported quarter. However, the company’s earnings surprise history is not impressive, as it delivered a negative earnings surprise of 3.86%, on average, over the past four quarters. Netflix belongs to a bottom-ranked Zacks industry (placed at the bottom 18% of 250+ industries).
The Zacks Consensus Estimate for the average target price is $400.76, with nearly 56% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.
What’s Hot?
A handful of analysts like Deutsche Bank, UBS, J.P. Morgan, Citi, and Wedbush raised their price targets on Netflix ahead of its earnings. Deutsche Bank projects billions of dollars in fresh revenues, stemming from the streaming service’s high-profile crackdown on password sharing among users. The analyst also sees the ongoing Hollywood strike as a possible justification for further gains.
The company's ad-supported tier is expected to positively impact subscriber and revenue growth. On the last earnings call, the streaming giant expected revenues to grow 3.4% to $8.2 billion and earnings per share of $2.84 for the second quarter.
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix share coming in at 10% (read: Best & Worst ETF Areas of First Half 2023).
MicroSectors FANG+ ETN has accumulated $139.6 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 153,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Invesco Dynamic Media ETF
Invesco Dynamic Media ETF provides exposure to companies engaged in the development, production, sale and distribution of goods or services used in the media industry by tracking the Dynamic Media Intellidex Index. It holds 32 stocks in the basket, with Netflix taking the second spot and accounting for 5.6% allocation.
Invesco Dynamic Media ETF has been able to manage $33.7 million in its asset base while seeing a lower volume of about 4,000 shares a day. It has 0.63% in expense ratio and a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
ProShares Nasdaq-100 Dorsey Wright Momentum ETF is the first ETF focusing on select Nasdaq-100 stocks identified as having the greatest potential to outperform. It follows the Nasdaq-100 Dorsey Wright Momentum Index and holds 21 stocks in its basket, with Netflix occupying the third spot at 5.5% (read: ETFs in Focus as Nasdaq 100 Undergoes Rejiggering).
ProShares Nasdaq-100 Dorsey Wright Momentum ETF has managed assets worth $11.3 million and trades in an average daily volume of 2,000 shares. It charges 58 bps in annual fees.
First Trust S-Network Streaming & Gaming ETF tracks the S-Network Streaming & Gaming Index and holds 44 stocks in its basket. Netflix is the second firm, accounting for 5.2% of the assets. From a sector look, entertainment takes the largest share at 45% while hotels, restaurants & leisure, semiconductors & semiconductor equipment, and interactive media & services round off the next three spots with double-digit exposure each.
First Trust S-Network Streaming & Gaming ETF has accumulated $4.7 million in its asset base and trades in average daily volume of under 1,000 shares. It charges 70 bps in annual fees.
Pacer BioThreat Strategy ETF seeks exposure to U.S. companies that provide their goods and services to the market by accomplishing one or more of the seven index themes. It tracks the LifeSci BioThreat Strategy Index, holding 52 stocks in its basket. Netflix occupies the third position with 5.1% of the assets.
Pacer BioThreat Strategy ETF has accumulated $3.9 million in its asset base and charges 70 bps in annual fees. It trades in a paltry average daily volume of 300 shares and has a Zacks ETF Rank #3.
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Netflix Target Price Up Ahead of Q2 Earnings: ETFs in Focus
Netflix (NFLX - Free Report) is set to release second-quarter 2023 results on Jul 19 after market close. Being the world's largest video streaming company, it is worth taking a look at its fundamentals ahead of the results.
Netflix shares rallied to their highest price in more than a year on Jul 17, after a series of analysts lifted the target price on the stock. The stock has outperformed the broader industry, having gained 39% over the past three months compared with the industry’s average gain of 4.3%. The solid trend might continue, given that Netflix has reasonable chances to beat estimates this quarter. Additionally, Netflix has seen favorable earnings estimate revision activity of late, which is generally a precursor to an earnings beat.
As a result, ETFs with the largest allocation to this streaming giant, like MicroSectors FANG+ ETN (FNGS - Free Report) , Invesco Dynamic Media ETF , ProShares Nasdaq-100 Dorsey Wright Momentum ETF (QQQA - Free Report) , First Trust S-Network Streaming & Gaming ETF (BNGE - Free Report) and Pacer BioThreat Strategy ETF (VIRS - Free Report) , are in focus.
Earnings Whispers
Netflix has an Earnings ESP of +2.11% and a Zacks Rank #3 (Hold). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The online video-streaming giant saw positive earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock (read: Ride the Streaming Wave With Netflix ETFs).
Though Netflix is expected to record an earnings decline of 11.9%, revenues are likely to increase 3.6% for the to-be-reported quarter. However, the company’s earnings surprise history is not impressive, as it delivered a negative earnings surprise of 3.86%, on average, over the past four quarters. Netflix belongs to a bottom-ranked Zacks industry (placed at the bottom 18% of 250+ industries).
The Zacks Consensus Estimate for the average target price is $400.76, with nearly 56% of the analysts giving a Strong Buy or a Buy rating ahead of the company’s earnings.
What’s Hot?
A handful of analysts like Deutsche Bank, UBS, J.P. Morgan, Citi, and Wedbush raised their price targets on Netflix ahead of its earnings. Deutsche Bank projects billions of dollars in fresh revenues, stemming from the streaming service’s high-profile crackdown on password sharing among users. The analyst also sees the ongoing Hollywood strike as a possible justification for further gains.
The company's ad-supported tier is expected to positively impact subscriber and revenue growth. On the last earnings call, the streaming giant expected revenues to grow 3.4% to $8.2 billion and earnings per share of $2.84 for the second quarter.
ETFs in Focus
MicroSectors FANG+ ETN (FNGS - Free Report)
MicroSectors FANG+ ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar-weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 stocks in its basket in equal proportion, with Netflix share coming in at 10% (read: Best & Worst ETF Areas of First Half 2023).
MicroSectors FANG+ ETN has accumulated $139.6 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 153,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).
Invesco Dynamic Media ETF
Invesco Dynamic Media ETF provides exposure to companies engaged in the development, production, sale and distribution of goods or services used in the media industry by tracking the Dynamic Media Intellidex Index. It holds 32 stocks in the basket, with Netflix taking the second spot and accounting for 5.6% allocation.
Invesco Dynamic Media ETF has been able to manage $33.7 million in its asset base while seeing a lower volume of about 4,000 shares a day. It has 0.63% in expense ratio and a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.
ProShares Nasdaq-100 Dorsey Wright Momentum ETF (QQQA - Free Report)
ProShares Nasdaq-100 Dorsey Wright Momentum ETF is the first ETF focusing on select Nasdaq-100 stocks identified as having the greatest potential to outperform. It follows the Nasdaq-100 Dorsey Wright Momentum Index and holds 21 stocks in its basket, with Netflix occupying the third spot at 5.5% (read: ETFs in Focus as Nasdaq 100 Undergoes Rejiggering).
ProShares Nasdaq-100 Dorsey Wright Momentum ETF has managed assets worth $11.3 million and trades in an average daily volume of 2,000 shares. It charges 58 bps in annual fees.
First Trust S-Network Streaming & Gaming ETF (BNGE - Free Report)
First Trust S-Network Streaming & Gaming ETF tracks the S-Network Streaming & Gaming Index and holds 44 stocks in its basket. Netflix is the second firm, accounting for 5.2% of the assets. From a sector look, entertainment takes the largest share at 45% while hotels, restaurants & leisure, semiconductors & semiconductor equipment, and interactive media & services round off the next three spots with double-digit exposure each.
First Trust S-Network Streaming & Gaming ETF has accumulated $4.7 million in its asset base and trades in average daily volume of under 1,000 shares. It charges 70 bps in annual fees.
Pacer BioThreat Strategy ETF (VIRS - Free Report)
Pacer BioThreat Strategy ETF seeks exposure to U.S. companies that provide their goods and services to the market by accomplishing one or more of the seven index themes. It tracks the LifeSci BioThreat Strategy Index, holding 52 stocks in its basket. Netflix occupies the third position with 5.1% of the assets.
Pacer BioThreat Strategy ETF has accumulated $3.9 million in its asset base and charges 70 bps in annual fees. It trades in a paltry average daily volume of 300 shares and has a Zacks ETF Rank #3.