Consumer Discretionary

Netflix’s first-quarter earnings positively surprised the markets with a sharp growth in subscriptions, Swissquote Bank senior analyst Ipek Ozkardeskaya says in a note. The streaming-service platform added more than 9 million new viewers and reported its best start to a year since the pandemic, the analyst highlights. Its performance was boosted by the ban on password-sharing, after Netflix estimated around 100 million people were using an account without paying for it, Ozkardeskaya says. However, comments on its 2Q revenue outlook fail to impress, along with investors’ disappointment regarding Netflix’s decision to stop reporting quarterly subscribers next year, the analyst adds. Shares in premarket trading are down 6.4% at $571.35.

Netflix (NFLX) continues to lead its competitors in the streaming content sector and has made the right decisions to evolve from a high-growth, low-profit business to a slow-growth, high-profit business, Wedbush said in a note on Friday. “We think Netflix has reached the right formula with global content creation, balancing costs, and increasing profitability,” Wedbush said. “We think Netflix will continue to expand profitability and generate increasing free cash flow.” Wedbush maintained its outperform rating and $725 price target, citing the company’s advertising potential for WWE next year, game expansion, product licensing, and growth in viewership. “We think Netflix can meet expectations for EPS to more than double between 2023 and 2026,” Wedbush said. Another dimension of Netflix’s evolution is the decision to stop reporting quarterly subscriber numbers and instead focus on regional revenue. “The company is unlikely to be challenged by competitors, and we think it has already ‘won’

Netflix’s planned shift away from quarterly membership numbers is a material change but giving major subscriber milestones “will be enough for long-term investors to continue to monitor the metric,” says New Street Research’s Dan Salmon in a note. Netflix, which will shift its approach starting in 1Q25, will add annual revenue guidance to offset the lost quarterly visibility. Salmon notes he’s eager to see what milestones get announced and estimates 15 million paid net additions in 2025, which will taper down to a little under 10 million in 2030. Shares decline 6.8% to $569 in premarket trading following softer-than-expected revenue outlook for the current quarter.

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: We think NFLX made a mistake by disclosing it will remove subscriber data starting in Q1 ’25, as it says the business is broader with other revenue streams. And yet, investors like advertisers want to know what is the subscriber base by total/regions. Global streaming paid members ($269/sub in Q1, +16% Y/Y) will be removed as well. Debate centers around valuation and what investors are willing to pay for a growth stock as we may be entering the next phase. Reflecting slower growth than the last three years, we lower our target by $10 to $640 using a forward TEV/EBITDA of 27.8x, a 20.6% discount to three-year historical average at 35.0x. We raise our EPS estimates in 2024 to $18.55 ($17.05) and 2025 to $21.95 ($20.60). Our

BofA Securities raised the price target on Netflix (NFLX) to $700 from $650 while maintaining its buy rating after the company reported “strong” Q1 results “including net adds” of 9.3 million. By comparison, the brokerage expected a 5.1 million estimate. analyst Jessica Reif Ehrlich wrote. Netflix will no longer disclose paid members , starting Q1 next year, Ehrlich said, citing the entertainment media giant. The brokerage sees the change as “a contributor to the negative after-market stock reaction.” Netflix has an average outperform rating and a price target range of $440 to $765, according to analysts polled by Capital IQ.

Netflix (NFLX) posted strong first-quarter results and has “several” growth drivers ahead, but its decision to stop disclosing two key performance metrics starting next year likely contributed to a share-price selloff, BofA Securities said in a note e-mailed Friday. Late Thursday, the streaming giant reported that its first-quarter revenue rose 15% year-over-year to $9.37 billion, while earnings jumped to $5.28 a share from $2.88, both topping market projections amid stronger-than-expected membership growth. The company projected second-quarter revenue at $9.49 billion, trailing Wall Street’s $9.53 billion views at the time. It expects net subscriber additions to be down sequentially due to seasonality. Netflix said in a letter to shareholders that it will stop reporting quarterly membership numbers and average revenue per membership, or ARM, starting with its 2025 first-quarter results. A lack of visibility into the two indicators likely dragged the stock lower in after-hours trade on Thursday, BofA analyst Jessica

Netflix Guides For Full Year 2024 Revenue Growth of 13%-15%; Operating Margin Seen at 25%.