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GBH Sets Expectations on Netflix (NFLX) Ahead of 1Q:18 Earnings Monday

GBH's Daniel Ives sees plenty of growth levers in Netflix's back pocket that have him confidently rooting for the giant's momentum.


As Netflix, Inc. (NASDAQ:NFLX) readies to serve up its first quarter print for the year in four days’ time, GBH Insights analyst Daniel Ives is out angling for a big outclass from the video streaming giant- along with a raise for the guide for the rest of the year.

Between two key tailwinds, a stellar “competitive moat” to international growth, the analyst reiterates a Highly Attractive rating on NFLX stock with a $375 price target, which implies a 19% upside from current levels. (To watch Ives’ track record, click here)

This first quarter looks even more robust than anticipated from where Ives surveys the bigger picture, which leads him to believe the giant will “handily” outclass consensus forecasts all over the board. The star of the show here for Ives is international growth, Netflix’s key growth driver moving ahead.

For the first quarter, now taking under account survey work and new analysis, Ives estimates Netflix will hit 7.5 million in net sub adds, even more than his original expectations for 6.4 million. Domestic to international net subs are each exhibiting “healthy momentum heading into the rest of 2018,” writes Ives, who sees this as a strength raring to outperform expectations. If Ives is right, domestic subs could hit 1.8 million for the quarter with international subs rocketing up to 5.7 million, high ahead of the Street’s estimates.

“We believe Netflix has a number of growth levers which should fuel the company’s next phase of strategic penetration among both US and especially international consumers. While the landscape for original content has become increasingly competitive with new entrants entering the market by the day (Disney/Fox remains a clear competitive worry) we believe Netflix remains in a unique position of strength to grow its content and distribution tentacles over the next 12 to 18 months and thus further build out its massive content and streaming footprint,” argues Ives for the bulls, sizing up enticing franchise appeal in this video streaming empire.

“In a nutshell, we view Netflix’s earnings as a clear positive catalyst for the stock and the overall tech sector with our expectations of a robust earnings season for FANG names on the horizon with Netflix kicking off the fireworks on Monday after the bell,” Ives concludes, placing a strong bet on this tech giant ahead of the print.

TipRanks indicates NFLX has Wall Street mixed on sentiment. Out of 21 analysts polled in the last 3 months, 21 are bullish on NFLX stock, 12 remain sidelined, while 1 is bearish on the stock. However, though there are more bulls than bears when it comes to Netflix’s market opportunity, are expectations dragging? Consider that the 12-month average price target stands at $307.81, marking a nearly 2% in loss potential for the stock.