Netflix, Inc. (NASDAQ:NFLX) Time to Sell
Mario Marciano said this morning traders in our live trading room will be ready to short NFLX.
“Intraday we are going to short this stock even the bulls don’t agree”
Netflix: Additional color on quarter — target raises effectively across the
board (98.13)
o FBR Capital raises their NFLX tgt to $142 from $129; earnings highlighted a
growth story that is working better than they anticipated when we upgraded
earlier this year with a split-adjusted price target of $129. Subscriber
growth is more robust than they anticipated. Expenses are lower, arguing for
a better earnings opportunity. They reiterate that consumers are liking
Netflix as much as, or more than, pay TV, which argues for subscriber and
pricing upside and lessens the need to aggressively grow content spending
(which equals big margin growth potential), with over $700M of contribution
profit from each $1.00 effective ARPU hike, and over $100M from each
addition of 1 million subs.
o Topeka Capital Markets raises their NFLX tgt to $126 from $114. After the
close, NFLX released Q2 results which, for the most part, beat all of their
pre-call metrics on the income statement, with subscriber gains on both
categories, especially the international category, exceeding both guidance
and consensus. Income statement guidance for the current quarter, as well as
subscriber guidance, was also quite strong. The print perfectly crystallized
what they’ve been saying now for over 14 months – that with NFLX is still on
the front edge of the S-curve, it’s global sub growth that primarily moves
the stock after these earnings releases.
o Needham notes NFLX is a market darling right now, with strong share price
momentum buoyed by: 1) subscriber growth overdelivery in the US and offshore
(driven by original content and new Spanish language content): 2) profit
margins well above estimates (marketing expenses lower than expected); 3)
globally scaled ROICs and multiyear international growth runways (50
countries going to 200 countries over the next 18 months); 4) 5% ASP growth
globally through tiering and new plans; 5) today’s agreement by Charter not
to charge NFLX and others to connect. NFLX shares recently split 7 for 1 and
they retain $111 tgt.
o Canaccord Genuity raises their NFLX tgt to $120 from $80; once again Netflix
reported very strong subscriber gains for 2Q15 with 3Q15 guidance that is
also better than expected. They believe the co is at an inflection point
where the meaningful addition of original content and rapid expansion to
additional countries are responsible for the generation of additional
subscribers overshadowing the additional cost pressures and near-term margin
compression that is expected for 2015. With the clear success of stimulating
incremental demand in the US market that has been thought to be increasingly
saturated, they believe we will continue to witness meaningful investments
in additional content that will in turn drive further subscriber gains. They
believe the stock’s performance will continue to reflect the strength of the
subscriber gains.
o Target raises (effectively across the board)
o Goldman to $140 from $111
o Piper Jaffray to $96 from $70
o JPMorgan to $127 from 89
o Cantor to $125 from $83
o Citigroup to $109 from $103
o Suntrust to $95
o Pac Crest to $122
o Morgan Stanley to $125
o NFLX +11% at new all time highs premarket.
Netflix, Inc. (Netflix), incorporated on August 29, 1997, is a provider of Internet television network. The Company has over 57 million streaming members in over 50 countries. The Company’s members can watch more than two billion hours of television (TV) shows and movies per month, including original series, documentaries and feature films in Internet-connected screen. The Company has three operating segments: Domestic streaming, International streaming and Domestic DVD. The Domestic and International streaming segments derive revenues from monthly membership fees for services consisting of streaming content. The Domestic DVD segment derives revenues from monthly membership fees for services consisting of DVD-by-mail. Netflix’s members can watch TV shows and movies directly on their TVs, computers and mobile devices. The Company offers streaming service both domestically and internationally.
The Company’s International streaming segment offers streaming service in Canada, Latin America, the United Kingdom, Ireland, Finland, Denmark, Sweden, Norway, Netherlands, Germany, Austria, Switzerland, France, Belgium and Luxembourg. Its members can play, pause and resume watching, all without commercials or commitments. Additionally, in the United States, Netflix’s members can receive DVDs to their homes.
The post Netflix, Inc. (NASDAQ:NFLX) Time to Sell appeared first on Live Trading News.