Analysts from Oppenheimer commented on video-streaming giant Netflix, Inc. (NASDAQ:NFLX) and telecoms firm AT&T Inc. (NYSE:T) regarding subscriber levels and earnings, respectively. Both gave bullish ratings, commenting on international subscribers for Netflix and a expressing positive outlook following AT&T earnings.
Analyst Jason Helfstein of Oppenheimer weighed in on Netflix shares after his meeting with company management, where they discussed “domestic subscribers, pricing, and the challenges/opportunities for international expansion.” The analyst states that low domestic add guidance from its recent earnings report resulted from “high US penetration, lingering credit card issues, and tough 1Q comps.” Despite this disappointment, the analyst states that revenue growth, not add growth, is a long term priority for the company. He also states that the company’s decision to “un-grandfather” subscribers, increasing their 2-stream membership price from $7.99 to $9.99 will have an impact this quarter. He believes that if subscribers remain at the 1-tier $7.99 membership, occurrences of password sharing will be less frequent, resulting in more new accounts.
The analyst continues by commenting on international expansion, as the company recently launched in over 160 countries. Due to increased marketing expenses regarding international markets, “domestic margin guidance could be conservative.” Helfstein is unclear if the conversion rate for Netflix will mirror that of the U.S. He concludes by stating that VPN issues will be immaterial regarding earnings.
On January 26, 2016, the analyst reiterated his Outperform rating and $140 price target.
Jason Helfstein has a 47% success rate on the stock with an average return of 5.2% per recommendation.
According to TipRanks, out of the 30 analysts who have rated the company in the past 3 motnhs, 17 gave a Buy rating, 4 gave a Sell rating, and 8 remain on the sidelines. The average 12-month price tareget for thes stock is $122.07, mariking a 29% upside from current levels.
Analyst Timothy Horan of Oppenheimer weighed in on AT&T yesterday after the company posted its Q4:15 earnings. The analyst commented that the earnings were “solid… with in-line subscriber trends.” While the company lost over 340K subscribers, surpassing his own 300K loss estimate, he notes pre-paid subscriber growth of 560K, beating his own estimates by 90K. Related, wireline and broadband losses were better than expected. The analyst expects the company’s unlimited data/DTV bundle to end this loss pattern in the future, as it offers more value to customers.
The analyst notes that the EPS of $0.63 slightly underperformed relative to his estimates and attributes this to “higher spending in Mexico and FX pressures, as well as weaker than expected revenue growth.” As a result of this lackluster revenue growth, the analyst is lowering his FY16E revenue estimates due to decreased revenue from wireless equipment. However, he believes that the company’s shift into the cloud “should greatly reduce expenses over time,” and is increasing his EPS estimates for the year. He also expresses bullishness on the company’s 2016 guidance, expecting a margin improvement “driven by DTV synergies and operational improvements from cloud technologies.”
On January 26, 2016, the analyst reiterates his Outperform rating on the company with a $40 price target as he believes that despite a mixed earnings report, “the 2016 outlook looks solid.” He continues by commenting on the stock dividend, explaining “T’s dividend payout ratio should be below 70% by 2017, which makes its 5.5% yield attractive.” Overall, he remains bullish and anticipates “new product announcements and revenue synergies.”
Timothy Horan has a 63% success rate recommending stocks with an average return of +3.2% per rating.
According to TipRanks’ statistics, 2 analysts have rated the company in the past 3 months with a Buy rating. The average 12-price target between these 2 analysts is $41, marking a 16% increase from current levels.