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SunTrust Remains Bullish on Netflix (NFLX) Stock Ahead of 3Q:18 Earnings


Netflix (NFLX) stock dropped a dizzying 4% on Wednesday, but barely denting its monumental 80% runup for the year. The dip comes ahead of the video streaming service’s expected earnings report on Tuesday, October 16, which could take some wind out of the stock’s sails if it’s anything short of flawless.

SunTrust Robinson analyst Matthew Thornton points out that his Subscriber Tracker continues to point to 3Q18 Int’l sub adds above consensus (>5.0m vs. >4.4m) and Domestic sub adds slightly above consensus. (>0.7m vs. <0.7m).

Looking out to 4Q18, Thornton views consensus Int’l sub adds of <6.1m as reasonable but not a low hurdle and Domestic sub adds of >1.6m as reasonable but not a low hurdle.

“Tactically, we attribute the 2Q miss/sell-off to a key piece of content underperforming and the World Cup, while our data now shows subscribers back to tracking ahead in 3Q and the next 4 quarters should culminate in key content (Stranger Things) against easing comps. Bigger picture, we see opportunity in India (early original content is resonating) and other large Int’l markets, in additional distribution (e.g. Reliance Jio India, Charter US), and in merchandising, and we see optionality around the box office, product placement, and content licensing,” Thornton wrote.

As such, Thornton reiterates a Buy rating on NFLX stock, with a price target of $410, which represents a potential upside of 19% from where the stock is currently trading. (To watch Thornton’s track record, click here)

How does Thornton’s bullish bet weigh in against the Street? It appears the analyst is not the only one enthusiastic on this video streaming giant’s prospects, with TipRanks analytics demonstrating NFLX as a Strong Buy. Out of 38 analysts polled in the last 3 months, 25 are bullish on Netflix stock while 11 remain sidelined, and 2 are bearish. With a return potential of nearly 14%, the stock’s consensus target price stands at $392. (See NFLX’s price targets and analyst ratings on TipRanks)