Will the Curtain Rise For Netflix?
During the fourth quarter, Netflix added 610,000 total U.S. subscribers, of which 220,000 were streaming only. It also added 380,000 international subscribers.
If management were to continue chasing subscribers by any means necessary, this could hurt long-term profitability, and cause a wide range of earnings estimates, says J.P. Morgan's Doug Anmuth. Still, he believes investors will continue to focus on subscriber additions, at least for now. He expects streaming margins to be higher than the 11% guidance Netflix gave last quarter, coming in at 12.4%. Anmuth rates Netflix shares "neutral" with a $95 price target.
Analysts surveyed by Thomson Reuters are looking for Netflix to lose 27 cents per share on $866.93 million in revenue. Analysts polled by Estimize are looking for Netflix to report a loss of 20 cents per share on $872.74 million in revenue.
Netflix appears to be focusing more on adding streaming subscribers, despite the DVD-rental business providing higher margins. Credit Suisse analyst John Blackledge believes streaming subscriber additions will be one of the more important data points from the earnings report. He rates shares "outperform" with a $140 price target.
Investors and analysts alike will want to hear whether the company can continue to add streaming subscribers, the increase in competition from the likes of Verizon(VZ) and Comcast(CMCSA) , and whether international traction continues to see positive momentum. Otherwise the recent share price gains (up 51% year-to-date) could abate, given the high-earnings multiple and general market jitters.
Shares of Netflix are lower in early Monday trading, off 2.97% to $102.96.
Interested in more on Netflix? See TheStreet Ratings' report card for this stock.
--Written by Chris Ciaccia in New York
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