Companies in the NA sector have received a lot of coverage today as analysts weigh in on Netflix (NFLX) and Ebay (EBAY).
Netflix (NFLX)
In a report released yesterday, Jeffrey Wlodarczak from Pivotal Research reiterated a Buy rating on Netflix, with a price target of $515. The company’s shares closed yesterday at $362.44, close to its 52-week high of $386.80.
Wlodarczak commented:
“We also remind investors that traditional media companies remain hampered in their ability to compete against NFLX given their current high monetization of the existing PayTV model (read: they are loath to create a product that drives consumers from traditional PayTV), not to mention media investor focus on short term margins. As NFLX gains scale, we expect further material price increases, while also still substantial increases in subscriber totals and eventually a rapid expansion in NFLX profitability, which we see reaching an ultimate ~35% EBITDA margin by ‘25 as investment in expanding content slows materially + new market launch/marketing costs dissipate + NFLX realizes scale efficiencies, all of which drive our ~$40 in EPS by ’25.”
According to TipRanks.com, Wlodarczak is a 5-star analyst with an average return of 9.3% and a 60.0% success rate. Wlodarczak covers the NA sector, focusing on stocks such as Liberty Media Corporation Series A Liberty SiriusXM Common Stock, Liberty Media Corporation Series A Liberty Formula One, and Liberty Global PLC LiLAC Class A.
Netflix has an analyst consensus of Strong Buy, with a price target consensus of $408.33, a 12.7% upside from current levels. In a report issued on July 2, SunTrust Robinson also maintained a Buy rating on the stock with a $402 price target.
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Ebay (EBAY)
In a report released yesterday, Robert Drbul from Guggenheim maintained a Hold rating on Ebay. The company’s shares closed yesterday at $39.03, close to its 52-week high of $41.11.
Drbul said:
“We expect SH GMV to grow +LSD% in FY19. In 2Q, operating margin expanded ~170bps YoY to ~26.9% (below our 27.1% estimate), led by leverage on sales and marketing expenses (~110bps of leverage vs. our 170bps est); looking to 2019, leverage on this line item will be a goal as spend is moderated (we forecast -LSD% sales and marketing expense growth in ’19 vs. +high-teens% in 2018). Product development costs also leveraged nicely (115bps of leverage vs. our expectation for 10bps of leverage) due to higher productivity across initiatives despite higher payments and advertising spend. G&A also showed further leverage (-60bps). This op. expense leverage offset a 100bps decline in gross margin, driven by investments in site operations and both 1P efforts. We update our estimates for today’s result and our updated outlook.”
According to TipRanks.com, Drbul is a 5-star analyst with an average return of 10.1% and a 68.1% success rate. Drbul covers the Industrial Goods sector, focusing on stocks such as National Vision Holdings Inc, Lululemon Athletica Inc, and Capri Holdings Limited.
The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Ebay with a $40.63 average price target, a 4.1% upside from current levels. In a report issued on July 15, Stifel Nicolaus also maintained a Hold rating on the stock with a $41 price target.
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