Internet giants Facebook Inc (NASDAQ:FB) and Netflix, Inc. (NASDAQ:NFLX) are both expected to publish results of first-quarter earnings in the upcoming weeks. The anticipation has led to many analyst speculations, offering insights on the popular stocks. Things seem to be looking up for the companies, who have both received bullish outlooks by analysts.
Facebook has taken much onto its plate lately. The social networking company has in recent years acquired Oculus VR, WhatsApp Inc., PrivateCore, and Instagram. Instagram, which Facebook acquired in 2012, has recently announced a new rollback feature that could potentially improve Q1 revenue according to SunTrust Robinson Humphrey analyst Robert Peck.
The rollback feature will display Instagram feed photos and videos based on what algorithms predict users will want to see most, as opposed to the previous method in which the feed was chronologically ordered. This change is no surprise, as it mirrors Facebooks news feed algorithm, said to be one of its key success factors. Could this change aid in boosting Facebook’s earnings?
Peck certainly thinks so. The analyst reiterates a Buy rating on FB, with a price target of $125.
The analyst further mentions the Instagram rollout could offset potential weakness, and help Facebook outperform in the first quarter.
Ahead of the earnings release date on April 27, Peck expects Q1 revenues of $5.05B, up 52% YoY and -10% QoQ. He notes that Facebook’s core business remains strong, in spite of obstacles. The analyst explains that Instagram’s new rollout feature could drive >$1.5B revenue lift in 2016 and >$3B in 2017. However, these long term estimates do not include Oculus Rift, WhatsApp ~1B, Messenger 900M, and Search.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Robert Peck has a yearly average return of 3% and a 54.5% success rate. Peck has a 36.2% average return when recommending FB, and is ranked #647 out of 3788 analysts.
Out of the 47 analysts polled by TipRanks, 42 rate Facebook stock a Buy, 4 rate the stock a Hold and 1 recommends a Sell. With a return potential of 20%, the stock’s consensus target price stands at $131.11.
Global movie and TV series streaming provider Netflix is expected to release 2016 first quarter results on April 18, 2016. In anticipation to this release, Needham & Company analyst Laura Martin recently weighed in on the stock, reiterating a Buy rating with a $125 price target.
Martin notes an expected boost in revenue as well as paying members. Specifically, the analyst predicts US paid membership to rise from 1.33 million (in 4Q15) to 2 million by the end of this quarter. More so, Martin expects NFLX to end Q1 at 45.4 million, representing a 4.6% increase q/q.
In terms of international streaming revenue, the analyst expects a total of $653 million and a contribution loss of $114.1 million. Further, international paid member growth is expected to be 4.35 million, up 25% y/y from 4Q15.
Revenue for the Domestic DVD segment according to Martin is expected to reach $140.3 million, while contribution profit is projected at $74.4 million.
The analyst notes that NFLX is likely to report revenue of $1.95 billion, which would be up 24% y/y. The stock is also thought to reach an operating income of $50 million, a net income of $11.1 million, and GAAP EPS of $0.03.
According to TipRanks.com, analyst Laura Martin has a yearly average return of 19% and a 65% success rate. Martin has a 21% average return when recommending NFLX, and is ranked #33 out of 3788 analysts.
Out of the 42 analysts polled by TipRanks, 26 are bullish on Netflix stock, while 12 are neutral, and 4 recommend a Sell. With a return potential of 19%, the stock’s consensus target price stands at $125.21.