Netflix Inc. (NFLX) Earnings Preview, What Do Analysts Think?

Netflix Inc (NASDAQ:NFLX)

Netflix Inc. took it 1-for-7 stock split yesterday when it moved from a $700 trading range to a $100 trading range. The stock closed down 85.82% at $100.37 in yesterday’s session and people who own shares of Netflix can now expect to have 7 more shares for every share of Netflix that they previously held. The stock has gained 1.51% in pre-market trading today as it is set to open for trading around $101.89 per share.

Netflix Inc Stock Split

Netflix is set to release its second quarter (Q2 2015) results today after the closing bell. The market will be watching closely to see how Netflix has fared in the last three months. The share price of Netflix has climbed by a massive 105.7% in the year-to-date period. The stock has gained 46.77% in the three months since the last earnings release. The stock has gained 6.67% in the last 5 trading sessions as optimism builds up in advance of its stock split and second quarter earnings release.

Here’s what analysts expects from Netflix’s second quarter earnings results:

Morgan Stanley’s Bullish Case for Netflix: Analysts at Morgan Stanley have reaffirmed their “Overweight” rating for Netflix. More so, they raised their price target from $620 to $750.

Benjamin Swinburne made Morgan Stanley’s positive views about Netflix known in a research note. Morgan Stanley’s bullish case for Netflix rests on the rate at which the firm chasing subscriber growth and the potential increase in revenue. He said, “Netflix is currently seeing higher time spent per day than any single broadcast network… We estimate streaming time per sub is growing 30% in ’15 vs. ’14.”

MKM Partners Bullish Case for Netflix: Analysts at MKM Partners have provided a bullish case for Netflix with the expectation that the firm will beat consensus estimates and guidance.

Rob Sanderson of MKM Partners says he expects Netflix to deliver a quarterly report with an upside potential in its international growth efforts. Mr. Sanderson said, “Phase-1 int’l markets are still in significant expansion stage and we forecast increasing contribution from Phase-2, as it anniversaries its Sep-14 launch”.

Subscriber Growth is Key

From the recommendations of the two analysts featured above, it is evident that the market is very interested in Netflix’s user growth. The market will be watching the subscriber numbers keenly, especially in U.S. where growth has been slowing. Shares of Netflix should continue the bullish ascent if the firm reports decent user growth.

Consensus Market Expectations

The market seems to be leaning towards the bullish camp for Netflix. Out of 44 analysts polled by Bloomberg, 22 have a “Buy” rating on the stock. 16 analysts have a “Hold” rating and 6 analysts have a “Sell” tag on the stock. The consensus estimate is that Netflix  will deliver revenue of $1.65B and earnings of $0.31 per share.

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Victor Alagbe is a seasoned business and finance writer with a specialty in writing about how to invest for the long-term in healthcare, pharmacology, energy and tech stocks. His long-term focus is on stocks that provide a nice mix of growth and income. For the short term, he passionately writes about trading stock options for the excitement and leverage that stock options offer.

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