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Preview: What to Expect From NetFlix’s Earnings Next Week

The California-based global internet entertainment service company NetFlix is expected to report its fourth-quarter earnings of $0.82 per share, which represents a year-over-year decline of over 30% from $1.19 per share seen in the same period a year ago.

However, the streaming video pioneer would post revenue growth of over 16% to $7.71 billion. It is worth noting that the company has beaten earnings per share (EPS) estimates just thrice in the last two years.

According to ZACKS Research, Netflix expects earnings per share of 80 cents in the fourth quarter of 2021. Zacks Consensus Estimate is pegged at $1.07 per share, higher than the company’s projection but down 10.08% from the quarterly figure reported a year ago.

In the fourth quarter of 2021, Netflix expects to have 222.06 million paid subscribers globally, an increase of 9% from the previous quarter. Revenue is expected to reach $7.71 billion, representing a 16.1% increase over last year. Based on Zacks Consensus Estimates, revenues are expected to be $7.70 billion, lower than the company’s expectations.

Netflix stock slumped nearly 3% to $65.86 on Friday. The stock rose over 12% so far this year after falling more than 2% in 2021.

Analyst Comments

“We believe share performance is highly dependent on increasing global membership scale. Proven success in the US and initial international markets provides a roadmap to success in emerging markets, and scale should allow Netflix (NFLX) to leverage content investments and drive margins,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“Higher global broadband penetration should increase the Netflix (NFLX) addressable market, driving member growth and providing further opportunity given NFLX’s global presence. Longer-term, we see the ability to drive ARPU growth, particularly given increased original programming traction.”

Netflix Stock Price Forecast

Thirty-one analysts who offered stock ratings for Netflix in the last three months forecast the average price in 12 months of $662.93 with a high forecast of $800.00 and a low forecast of $342.00.

The average price target represents a 28.87% change from the last price of $514.42. From those 31 analysts, 23 rated “Buy”, five rated “Hold” while three rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $700 with a high of $900 under a bull scenario and $440 under the worst-case scenario. The firm gave an “Equal-weight” rating on the internet television network’s stock.

Several other analysts have also updated their stock outlook. UBS cut the target price to $690 from $720. Moffett Nathanson lowered the target price by $5 to $460. Baird slashed the target price to $575 from $680. Stifel cut the target price to $660 from $690.

Technical analysis also suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator are giving a mixed signal.

Check out FX Empire’s earnings calendar