Harriet Lefton

About the Author Harriet Lefton

Harriet originates from the UK where she worked as a journalist specializing in the metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer.

Tuesday’s Market Insights: Netflix, Inc. (NFLX) Dips, Interpace Diagnostics Group Inc (IDXG) and GNC Holdings Inc (GNC) Soar

Netflix, Inc. (NASDAQ:NFLX) shares are dipping by 2% in Tuesday’s trading session following the release of the company’s mixed Q1 2017 earnings results on April 17. Although shares rose slightly immediately after the release, the stock has now seen a slight pullback from about $147 to $144 as the market digests the figures.

The video distribution company posted earnings per share (EPS) of $0.40 on revenues of $2.64 billion. EPS beat consensus estimates by $0.03 while revenue was exactly in-line with expectations, however subscriber additions were weaker-than-expected. In the first quarter, Netflix only added 4.95 million total new subscribers vs. Wall Street estimates for 5.27 million- a fact which the company attributed to its decision to move the next season of hit show “House of Cards” from Q1 to Q2.

However, Netflix surprised the market with its forecast 3.2 million additional subscribers in the seasonally soft second quarter, easily outdoing analyst estimate of nearly 2.4 million. As for the full year, Netflix intends to encourage new subscribers with marketing saying: “We’ll spend over $1 billion in 2017 marketing our content to drive member acquisition.” The company will also “continue to add long-term debt as needed to finance our expansion of original content, including in Q2’17” and plans to have around $2 billion in negative free cash flow this year.

Since the earnings release, a slew of analysts reiterated their stock ratings with several analysts expressing more bearish opinions. On the bull side, five-star JP Morgan analyst Doug Anmuth explains weak subscriber additions as the result of lighter content releases recently, adding that the underlying secular trend towards Internet TV “remains very strong.” His price target of $178 is in strong contrast to top Deutsche Bank analyst Bryan Kraft who says Netflix’s risk/reward is unattractive and kept his $125 price target.

The stock has a moderate buy analyst consensus rating according to financial accountability engine TipRanks, with a total of 21 buy, 13 hold and 1 sell ratings published on the stock in the last three months. With an average analyst price target of $158, NFLX has upside potential of 9% from its current share price of $145.

Interpace Diagnostics Group Inc (NASDAQ:IDXG) shares are exploding by 91% in today’s trading after the company announced that UnitedHealthcare, the largest health plan in the US, has agreed to cover Interpace’s ThyraMIR test for thyroid cancer biopsies. According to Interpace, the coverage is now in effect and is subject to members’ specific benefit plan design. The test- which was already approved by Medicaid in January 2016- is designed for patients with indeterminate results to identify benign nodules, enabling patients to avoid unnecessary thyroid surgery. Data from the American Cancer Society shows that thyroid cancer is the most rapidly increasing cancer in the US, tripling in the past three decades.

GNC Holdings Inc (NYSE:GNC) shares in this nutrition retailer are soaring by just over 20% in today’s trading following a surprise earnings beat. GNC announced EPS of $0.35 cents on revenue of $645 million for Q1 2017 vs the estimated EPS of $0.34 on revenue of $627 million. However, the gain is overshadowed by the decline in GNC shares of 34% in the year to date, and by a shocking 78% over the last 12 months. For example, EPS in the same quarter last year came in at $0.69.

GNC said its transactional growth rate increased 9.3% in the first quarter, the “strongest growth this company has seen in years,” according to interim CEO Bob Moron. “We’re encouraged by positive trends in transactions, and by the early performance of our new loyalty programs,” Moran said.

Going forward, GNC intends to leverage information from its loyalty program, which now has over 5 million users, to “better reach and more cost effectively speak to its customers.” GNC trashed its Gold Card loyalty program in December after realizing that the typical Gold Card member visited GNC stores just four times in an entire year.


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