What Wall Street Is Saying: Previewing Netflix Earnings - TheStreet

What Wall Street Is Saying: Previewing Netflix Earnings

Media-streaming major Netflix is set to report third-quarter results on Oct. 20. Here's a sample of Wall Street commentary.
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Media-streaming giant Netflix  (NFLX) - Get Report is scheduled to report its third-quarter results on Oct. 20.

Analysts at Cowen, Goldman Sachs and Piper Sandler all released analyst notes on Wednesday. 

Here a sample of what Wall Street is saying about Netflix. 

Cowen (Outperform Rating Affirmed, $625 PT Raised From $550)

We view NFLX as a pioneer in online streaming, with further expected growth in subscribers in the U.S. and expectation for long-term subscriber growth internationally in existing and new markets. At scale, NFLX subscriptions have very high incremental margins (about 80% to 85%), which should provide margin upside longer term.

We asked which of the following platforms (channels, apps or websites) do you use most often to view video content on your TV? Netflix again held the top position with 27% of total respondents, followed by basic cable (20%), broadcast (15%) and YouTube  (GOOGL) - Get Report (11%).

-John Blackledge

Goldman Sachs (Buy Rating Maintained, $670 PT Raised From $600)

We expect Netflix to report third-quarter results well above guidance and consensus expectations, with roughly 6 million net subscriber additions, driven by growth in content on the platform, a lack of competition for entertainment hours and spend, and more time being spent at home, potentially offset by churn levels modestly higher than we’ve seen in the past two quarters.

While management is likely to continue to guide conservatively given outperformance earlier in the year and the massive uncertainty of the current environment, we believe consensus estimates for the fourth quarter and beyond remain too low.

-Heath Terry

Piper Sandler (Overweight Rating and $534 PT Maintained)

We remain comfortable with our estimates for 8.8% and 34.5% subscriber growth year over year for the U.S.-Canada and international, respectively, driven by the ongoing stay-at-home environment, which boosted first-half 2020. We anticipate little impact from HBO Max,  (T) - Get Report launched 5/27. Despite increasing competition, Netflix continues to capture a significant share of content consumption dollars. Additionally, with covid-19 fears pushing consumers away from travel and out-of-home entertainment, we look for Netflix to continue as a beneficiary of this altered behavior.

-Yung Kim