Back to top

The Zacks Analyst Blog Highlights: Netflix

Read MoreHide Full Article

For Immediate Release

Chicago, IL – August 8, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Netflix (NFLX - Free Report) .

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday’s Analyst Blog:

Should Investors Stay Away From Netflix (NFLX - Free Report) Stock?

Netflix has seen its stock price plummet over 12% since the streaming TV firm reported quarterly financial results that scared investors, with much of the concern directed at lower-than-expected subscriber growth. But while some might want to buy NFLX stock on the dip, now might be time for continued Netflix caution.

Q2 Overview

Netflix posted adjusted earnings of $0.85 per share, which topped our Zacks Consensus Estimate. The firm saw its Q2 revenues soar roughly 43% to hit $3.91 billion. However, the company fell short of revenue projections because it came in well below its own subscriber estimates.

Netflix added 5.2 million new subscribers last quarter, which came in 1 million below its 6.2 million forecast. At 700,000, the company missed its 1.2 million U.S. user growth projection. Meanwhile, Netflix added 4.5 million international subscribers, when it called for 5 million new subscribers outside of the U.S.—where the company is supposed to have more room to grow.

User Growth Worries?

Netflix closed the quarter with just over 130 million subscribers worldwide. This marked a roughly 25% surge from the year-ago period when the company closed the second quarter with 104 million total subscribers. The worry here is two-fold. It is hardly a great sign that management was so far off on its own vital growth estimates. The other much larger concern is did the second quarter spell the start of plateauing subscriber growth?

The company had topped its own subscriber forecasts in seven out of the previous nine periods, including beats in the trailing four quarters. More worrisome still is that Netflix had crushed its forecasts recently.

Looking Ahead

Netflix expects to add 5 million new subscribers during the third quarter, with 650,000 expected in the U.S. and 4.35 million internationally. The U.S. subscriber figures will become increasingly important since there are already signs that the company’s days of large domestic growth are over. NFLX ended the quarter with roughly 57.4 million total U.S. subscribers up around 10% from the prior-year period’s 51.9 million.

However, the firm’s long-term view is that its U.S. subscriber base can grow to between 60 to 90 million. Therefore, on the low-end, Netflix has practically no room to grow at home, while it could add more than 30 million users on the high end. Netflix’s extremely broad domestic growth forecast demonstrates how saturated the streaming market is, but also how uncertain the company’s future is.

Bottom Line

Netflix is projected to see its full-year revenues surge by nearly 36% to $15.89 billion, based on our current estimates. The company is expected to see its adjusted earnings skyrocket 115% to $2.69 per share.

It is a good sign that Netflix looks poised to grow its top line by an impressive amount, while also becoming much more profitable. But the company has seen a ton of downward earnings estimate revisions over the last 30 days for Q3, the full year, and fiscal 2019. NFLX is also trading at over 95X forward 12-month Zacks Consensus EPS estimates. Therefore, investors might want to remain cautious about Netflix for the time being.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com/

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Netflix, Inc. (NFLX) - free report >>

More from Zacks Press Releases

You May Like