Top-ranked analyst and head of Internet and media equity research at Cantor, Youssef Squali, offered an overview of what to expect from internet names such as Netflix, Inc. (NASDAQ:NFLX) and Yahoo! Inc. (NASDAQ:YHOO), as the companies are preparing to release first-quarter earnings next week.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, Squali has a yearly average return of 14% and a 63% success rate. Squali is ranked #15 out of 3787 analysts. Let’s take a closer look.
Squali reiterated a Buy rating on shares of Netflix, with a price target of $140, as the streaming video leader will report first-quarter results after the market close on Monday, April 18. The analyst expects Netflix to report strong but generally in-line 1Q:16 results on 4/18, with solid aggregate subscriber growth.
Squali noted, “While domestic net adds have slightly missed expectations over the last two quarters, impressive growth in international subscribers has more than offset the domestic shortfall. We believe these trends will continue near-term as the Oct’15 domestic price hike roll out to a substantial part of the user base in 2Q:16 and 2H:16, and as the expansion in 130 countries in 1Q:16 takes hold. Given the company’s subscriber growth potential worldwide, improving original content, unmatched value proposition and the ongoing shift to on-demand viewing/unbundling, we remain constructive on the name.”
“Our 1Q:16 revenue, EBITDA, GAAP EPS, and NEPS estimates are $1,958.2M (+24.5% Y/Y), $101.8M (5.2% margin), $0.03, and $0.09 vs. consensus (FactSet) estimates of $1,965.4M, $104.9M, $0.03, and $0.07, respectively. Management guided to 1Q GAAP EPS of $0.03,” the analyst added.
Out of the 36 analysts polled by TipRanks, 20 rate Netflix stock a Buy, 12 rate the stock a Hold and 4 recommend to Sell the stock. With a return potential of 20%, the stock’s consensus target price stands at $122.89.
In addition, Squali reiterated a Buy rating on shares of Netflix, with a price target of $140, as the company is scheduled to report its first-quarter earnings results on Tuesday, April 19, after the market close. The analyst believes results will be in line with muted expectations, reflecting ongoing challenges in its turnaround.
Squali wrote, “For core Yahoo!, focus is likely to be on the severity of declines in Display and Search, as desktop weakness continues to outweigh strength in Mavens. Importantly, much of the focus will be on Yahoo’s sale process, which seems to be gathering momentum, and/or updates on plans for a reverse spin-out of core + YJ, two topics management is likely to avoid addressing.”
“Our 1Q:16 net revenue and EBITDA estimates of $837.9M and $125.7M are roughly in line with the Street’s (FactSet) $848.0M (guidance $820-860M) and $115.5M (guidance $100-120M), respectively. These reflect a 19.6% Y/Y decline in net revenue and 15.0% EBITDA margin. We’re also modeling for NEPS of $0.06 vs. consensus at $0.08,” the analyst added.
Out of the 24 analysts polled by TipRanks, 12 are bullish on Yahoo! stock, while 12 are neutral and one is bearish. With a return potential of 5%, the stock’s consensus target price stands at $38.30.