Analysts weigh in on the micro-blogging giant Twitter Inc (NYSE:TWTR) and video streaming giant Netflix, Inc. (NASDAQ:NFLX), offering compelling reasons for their ratings and summarizing expectations.
Deutsche Bank analyst Ross Sandler reiterated a Buy rating on shares of Twitter, with a price target of $40, which implies an upside of 128% from current levels.
Sandler wrote, “Twitter sits atop the “highly-speculative contrarian long idea” list for 2016 in consumer internet. Same as last year, the only thing that could potentially drive a re-rating & a change in the negative narrative is re-accelerating MAU growth, the timing of which seems to be nearly impossible to predict. However, at 10x our below-cons 2017 EBITDA, we think valuation reflects the well-documented concerns, even if we get a guide-below for FY16 which is largely expected at this point. We patiently wait to see what new products Jack Dorsey can ship to close the gap between core DAUs & the 1B mainstream non-Twitter users.”
According to TipRanks.com, a site that tracks and ranks analysts on their predictions, analyst Ross Sandler has a yearly average return of 4.2% and a 52.6% success rate. Sandler has a -33.6% average return when recommending TWTR, and is ranked #485 out of 3585 analysts.
Out of the 44 analysts polled by TipRanks, 29 rate Twitter stock a Buy, 23 rate the stock a Hold and 3 recommend Sell. With a return potential of 109.5%, the stock’s consensus target price stands at $36.72.
Wedbush analyst Michael Pachter reiterated an Underperform rating on shares of Netflix, with a price target of $40, as the company will report Q4:15 results after the market close on Tuesday, January 19.
Pachter noted, “We expect Q4 results in line with guidance. Our estimates are for revenue of $1.84 billion and EPS of $0.02 vs. consensus for revenue of $1.83 billion and EPS of $0.02 and guidance for EPS of $0.02. We expect domestic streaming sub net adds of 1.65 million and international streaming sub net adds of 3.75 million vs. guidance of 1.65 million and 3.50 million, respectively. Netflix recently released its first three feature films, which likely drove subs growth, despite negative reviews for its Adam Sandler movie. We think Netflix’s deal with DISH Network, which offers a free year of service, drove 400,000 – 500,000 new domestic subscriber additions. Launches in Spain, Portugal and Italy in October likely drove overseas momentum.”
The analyst concluded, “We believe Netflix’s high valuation is unwarranted given the potential for slowing domestic growth coupled with decreasing international profitability.”
According to TipRanks.com, analyst Michael Pachter has a yearly average return of -9.2% and a 35% success rate. Pachter has a -49.6% average return when recommending NFLX, and is ranked #3509 out of 3585 analysts.
Out of the 41 analysts polled by TipRanks, 26 rate Netflix stock a Buy, 12 rate the stock a Hold and 3 recommend a Sell. With a return potential of 17.5%, the stock’s consensus target price stands at $119.88.