All Eyes on Netflix, Inc. 4Q Earnings Tonight

Two analysts are weighing in cheering strong subscriber growth ahead of Netflix's fourth quarter print this evening.

Netflix, Inc. (NASDAQ:NFLX) shares are rising 2% today as the buzz builds for the first Internet player’s quarterly print of a new round of earnings. Two bulls are chiming in with confident voices setting positive expectations for the video streaming giant.

GBH Insights analyst Daniel Ives says for this giant, especially this year and looking ahead to the future, “content is king for Netflix.”

Anticipating better than anticipated net subscription adds couple with fired up international momentum that looks to be steamrolling for the remainder of the year, the analyst reiterates a Highly Attractive rating on NFLX stock while hiking the price target from $235 to $255, which implies a close to 13% upside from current levels. (To watch Ives’ track record, click here)

“We believe Netflix had a stronger than expected net sub add quarter for 4Q despite its domestic price increase and should handily exceed the Street’s estimates across the board, with international growth remaining ‘front and center’ as the main growth catalyst going forward,” writes Ives, finding that between a one-two punch of a competitive moat and solid international gains taking off, these two “major tailwinds” are banking in Netflix’s favor.

Taking under account recent survey work and by his own calculations, Ives wagers net sub adds could reap 7 million for the fourth quarter, outperforming the analyst’s own expectations for 6.3 million and lapping the third quarter’s 5.3 million. Domestic and international net subs are flashing “healthy momentum,” and for this reason, the analyst likewise bets on not just a robust fourth quarter showcase but also a solid guide for 2018.

“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. Our bullish thesis on Netflix is based on our belief that the company’s competitive moat, franchise appeal, ability to increase international streaming customers through 2020, and original content build out will translate into robust profitability and growth as the next phase of this story plays out over the coming year,” asserts Ives, praising a variety of “growth levers” at Netflix’s disposal, adding more bullish “fuel” to fire.

Is Netflix starting to “look more fully-valued?” Top analyst Michael Graham at Canaccord wagers yes, bullish on the giant “as NFLX kicks off Internet earnings season Monday.”

Ahead of tonight’s bell, the analyst reiterates a Buy rating on NFLX stock with a $225 price target, which aligns with where the stock is currently trading. (To watch Graham’s track record, click here)

Graham notes, “For Q4, we think our subscriber outlook is reasonable given a content slate that saw a relatively smaller number of higher-profile releases (Stranger Things 2).”

Overall, the top analyst boils down the “important stories for 2018” for the video streaming giant to the following three narratives: “1) Subscriber growth should remain strong as greater content investment rolls through; 2) NFLX needs to raise prices modestly over time, but 2018-2019 could see proliferation of competitive subscription offerings (DIS); 3) our valuation framework looks all the way out to 2021 EPS and is getting full, implying the need for upward estimate revisions (which are more likely to come from margins than top line) to stay constructive on the stock.”

TipRanks shows a great deal of optimism circling Netflix stock on Wall Street. Out of 21 analysts polled in the last 3 months, 16 are bullish on Netflix stock, 4 remain sidelined, while 1 is bearish on the stock. With a return potential of 3%, the stock’s consensus target price stands at $232.57.

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