Here's what Wall Street is saying about Netflix's blowout subscriber growth last quarter (NFLX)
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Netflix surprised Wall Street on Wednesday when it reported fourth-quarter earnings and subscriber growth.
In the US, net additions totaled 1.93 million, much better than the consensus forecast among analysts of 1.38 million and Netflix's own prior estimates. Earnings per share were $0.15, two cents above the median forecast.
Netflix's performance drove its stock higher in after-hours trading. On Thursday, it hit an all-time high of $143.45, up by 6%, in the first few minutes of trading.
The streaming service is making a major push outside the US and investing heavily in original content that works for audiences everywhere.
"We are in no rush to push margins up too quickly, as we want to ensure we are investing aggressively enough to continue to lead internet TV around the world," the company said in its earnings letter.
Below are some analysts' reactions to the earnings results and their ratings of the stock.
Jefferies: BEARISH
Rating: Underperform
Price target: $95 (from $80)
Comment: "While the international subscriber growth will drive the stock higher, we note cash burn remains above expectations, with fixed cost leverage elusive," said John Janedis.
Credit Suisse: NEUTRAL
Rating: Neutral
Price target: $143
Comment: "For the longer term, Netflix will be looking to show a greater balance between growth and profitability — which to us validates the long-term investment thesis for its international and newer cohorts to follow along the margin expansion trajectory of the US," said Stephen Ju and Christopher Ford.
Macquarie: NEUTRAL
Rating: Neutral
Price target: $130
Comment: "We remain cautious on some items we have discussed at length in previous notes, namely rising content and other costs, and concurrent FCF [free cash flow] burn in the face of rising competition, but subs are what drives this stock and for now the sub additions are covering these," said Tim Nollen. "As such, we are upgrading the stock from underperform to neutral."
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