Big expectations for Netflix earnings after the bell — here’s what major analysts are predicting

All eyes will be watching Netflix Thursday as the streaming giant reports earnings after the bell.

The company raised prices earlier this week 13 to 18 percent with most analysts and investors cheering the move. Since then Goldman raised their price forecast to $420 from $400 and Thursday morning, Guggenheim upped their price target to $400 from $370.

The price increase caused the shares to soar and the stock is now up more than 30 percent this year going into the numbers.

Here’s what some of the other analysts say to look for:

“What are the biggest 4Q risks? 1) We tweaked down our 4Q paid net adds (1.28M US and 5.97M Int’l), and are now modestly below mgmt’s guide driven by the above mentioned back-end weighted content slate… However, we are more focused on total net adds in 4Q, and importantly 1Q paid net adds should benefit; 2) 4Q Int’l net adds expectations are creeping higher, and based on our conversations we believe expectations are now slightly above mgmt’s 7.60M total net adds guide; and 3) We believe FX could cause NFLX to slightly miss reported 4Q revenue and operating income… We lowered our 4Q revenue by 0.5% to $4,179M (vs. $4,199M guide) and our 4Q operating income by 2.9% to $199M (vs. $205M guide).”

“We expect Netflix to report 4Q results well above and provide initial guidance for 1Q in-line or modestly above FactSet consensus after the close… The strong release slate in the quarter (Exhibit 7), growing content library, and broadening distribution network (Exhibit 6) combined to drive this outperformance, in our opinion, and should continue to do so in the year ahead as 2017/18’s significant increase (Exhibit 4) in cash content investment pays off (Exhibit 5)… While the stock has significantly outperformed since the beginning of the year as investor expectations have risen, creating some risk around the print itself, we continue to believe that as Netflix exceeds investor expectations for subscriber growth and profitability throughout 2019 shares will continue to outperform.”

“Our investor conversations on Netflix cover a broad range of topics, though we can typically boil these topics down to three key questions: How many subscribers? At what price? At what profitability? While tonight’s call will likely provide insight into near-term trends and overall strategy, as with our recently published work our goal is to provide context for those results….We reiterate our BUY rating and raise our price target to $400 from $370.”

“We expect solid Q4 results, supported by our quarterly U.S. survey, driven by strong content releases, including Bird Box, The Haunting of Hill House, Bodyguard, etc.,, That said, with the stock up 30%+ over the past month, expectations are also high.”

“We expect solid 4Q18 results, led in part by NFLX adding a record number of Original programming hours, +88% y/y… Our latest US survey data suggests NFLX maintains its lead in the living room, particularly among younger demos… Our est’s are largely unchanged, incorporated Oct. debt raise & rolled model forward to ’29… PT unchanged at $430, Maintain Outperform.”

“After a mixed year, Netflix remains positioned for growth..2018 was a mixed year for NFLX, fundamentals improved and the stock finished the year up 32%, but only after declining 28% from Labor Day through year end… Subscriber growth (assuming 4Q is in line with guidance) ended up easily exceeding beginning of the year estimates despite a substantial 2Q miss and low original 3Q guide shaking investor confidence… Going forward, key questions include the cost of content and cash burn as competitive streaming offerings ramp up (peers projected to spend $25bn on content in ’19). We are keeping our Buy rating and PO of $440.”

“The shift toward life as a vertically integrated streaming business is accelerating, evident in a declining level of licensing obligations to 3rd parties and a ramp in spending on originals… This should translate into 1) a deeper moat, 2) greater operating leverage, and 3) meaningful FCF long-term…Our View: The shift to originals and away from acquired is evident in the financials already in two ways… First, the growth in contractual liabilities to third party studios is slowing…Second, Netflix has already scaled a fairly massive global studio with production capacity around the world….While this shift has pressured FCF, it is allowing Netflix to continue to grow net adds and, as importantly, contribution profit per sub.”

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