Analyst Provides First Glance on Netflix (NFLX) ‘Eye Popping’ 1Q:18 Earnings

Subscriber additions propel Netflix to near all-time high; GBH's Daniel Ives joins the party.


Netflix’s (NASDAQ:NFLX) stock climbed nearly 6% in after-hours trading Monday, as the company posted its first quarter results, which were better than expected due to strong growth in subscribers. Specifically, the video streaming giant added 7.41 million subscribers this past quarter, beating Wall Street expectations of 6.5 million subscribers. Overall, the company hit 125 million members in Q1. In addition, Netflix reported earnings per share of 64 cents, in-line with expectations, and slightly beat on revenue of $3.7 billion, compared to the Street’s $3.69 estimate.

Looking ahead, Netflix expects to add 6.2 million subscribers in the upcoming quarter – up from 5.2 million in the year-earlier quarter, and higher than Wall Street expectations of 5.24 million.

GBH analyst Daniel Ives commented, “Domestic streaming net adds of 1.96 million vs. the Street at 1.48 million was one of the biggest positive takeaways for the bulls, as this continues to show no signs of softness from the price increase installed in the December quarter. International net sub adds of 5.46 million vs. the Street of 5.02 million was very impressive as we believe international subs marches down the path to hitting between 90 million and 100 million subs by 2020 and is key to our bull thesis. As we head into the rest of 2018 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 and this quarter reiterated this message “loud and clear” as the king of content continues to streamroll ahead.”

“Overall, this was a “grand slam quarter” for Netflix and should put any lingering worries to rest around sub growth, international ramp, and the “negative” lingering possible effects from the price increase. We also believe Netflix should kick off what we expect will be a strong earnings season over the coming weeks for tech and FANG names in particular,” the analyst concluded.

As such, Ives reiterates a Highly Attractive rating on NFLX shares, with a price target of $375, which implies a 22% upside to today’s closing price. (To watch Ives’ track record, click here)

Where does the rest of the Street side on this streaming media player? It appears mostly bullish, as TipRanks analytics demonstrate NFLX as a Buy. Out of 36 analysts polled in the past 3 months, 22 are bullish on Netflix stock, while 13 remain sidelined, and one is bearish.