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Goldman Sachs (NYSE:GS), Cowen and Piper Sandler are among the brokers who have lifted their targets on shares of the “Tiger King” producer, while Loup Ventures’ Gene Munster called the performance “staggering.”
It wasn’t all positive though, with the company cautioning that some of the virus impact may be temporary and also noting a stronger dollar may reduce the value of sales abroad. Content production has also come to a halt.
The stock was down 2.5% at $422.98 in pre-market trading, having risen 34% year-to-date.
Here’s a summary of what analysts had to say.
Loup Ventures, Gene Munster
Paid net membership adds were “staggering,” and it’s important to note that the company has a notoriously conservative management team.
However, the quarter can be summarized as temporary. “Unfortunately, the truth is people want to spend less time at home.”
Goldman Sachs, Heath P. Terry
Management’s assertion that outperformance was a function of subscribers being pulled forward and that net adds in the second half will fall is likely to prove overly conservative.
The company will continue to benefit from word of mouth customer acquisition and growth in lower cost mobile only plans, as well as a significantly easier competitive environment.
Cowen, John Blackledge
Streaming services typically are counter-cyclical during economic pullbacks because of price/value relationship.
International paid subscriber additions to be driven by increased focus on local content.
Piper Sandler, Michael J. Olson
Raised full-year subscriber estimates, but only modestly, as increased churn is anticipated upon the loosening of rules keeping people at home.
Noted growth was driven in part by the expected roll-out of the 2020 content slate without delays.
CFRA, Tuna N. Amobi
Second quarter guidance for 7.5 million global net adds could be conservative.
Noted the reaffirmation of Netflix’s target for another 300 basis points of margin expansion in 2020.
Citi, Jason B. Bazinet
Subscriber growth exceeded Citi’s expectations in all four regions. Noted EMEA net adds were 6.96 million versus the bank’s forecast of 3.8 million.
That said, management noted a strong dollar may temper the financial impact of better-than-expected subscriber growth.
Wells Fargo, Steven Cahall
Report demonstrates the unique value of Netflix in these even more unique times. “As long as hand sanitizer is sold out, NFLX should outperform, and execution is outstanding.”
Prior bearish view was on valuation with concerns around long-term cash generation, “but frankly such long-term views are a bull market luxury.”
Few businesses are growing right now, but Netflix is adding subscribers at a break-neck pace.
©2020 Bloomberg L.P.
