The earnings season is about to heat up, as the tech players now enter the Q2 proceedings. Once market action comes to a halt today, Netflix (NASDAQ:NFLX) will try to impress Wall Street with its latest financial statement.
The streaming giant has been a beneficiary of new initiatives such as its ad-supported tier and paid sharing and has seen subscriber growth back on the menu. The shares have also been on an upward trajectory, adding 33% so far this year.
Can the upbeat mood continue once the Q2 results are in?
Evercore’s Mark Mahaney, a 5-star analyst rated in the top 1% of the Street’s stock pros, doesn’t take a particularly confident stance. “The bar is high,” says Mahaney, “and while we’re long-term NFLX Bulls, we’d be cautious going into this print.”
Mahaney is calling for revenue of $9.49 billion, in line with the guide and just a touch below the Street’s forecast of $9.53 billion. At the other end of the scale, Mahaney is expecting $4.69 in GAAP EPS, roughly the same as the guide and below consensus at $4.74. The analyst also estimates Global Paid Subs Net Adds of 4.0 million, while the Street has that figure at 5.0 million.
Although on the latter, Mahaney remains below the Street, he sees that estimate as “reasonable.”
Yet, it is due to buyside expectations being “materially ahead of Street” at 8 million+ Q2 Net Adds that Mahaney thinks disappointment could be the order of the day. “We would caution against significantly elevated expectations, esp. given the typical seasonality for Q2s, a relatively uneventful content slate except Bridgerton (the most watched title in the quarter, with ~20% more watch time than The Night Agent managed in 2Q23), as well as potentially subsiding Paid Sharing incrementality just as NFLX starts to comp against the broad Paid Sharing rollout last Q2.”
Nevertheless, despite these concerns, Mahaney rates NFLX shares an Outperform (i.e., Buy), along with a $700 price target. There’s a potential upside of 8% from current levels. (To watch Mahaney’s track record, click here)
Looking at the ratings breakdown, based on 23 Buys, 12 Holds and 1 Sell, the consensus view is that NFLX stock is a Moderate Buy. The forecast calls for only modest upside of 4% over the next year, considering the average target stands at $673.89. (See Netflix stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
