Netflix (NFLX): Price Target Goes Up But FCF Estimates Go Down - Evercore ISI
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Evercore ISI analyst, Ken Sena, reiterated his Sell rating on shares of Netflix (NASDAQ: NFLX) despite the company solidly beating estimates over FCF concerns.
Netflix reported a strong beat to estimates with the exception of FCF, where its $506mm quarterly loss was double the expected loss as well as double the loss of a year ago. While the company expects 4Q16 FCF losses to be similar, its guidance for net adds, revenues, and operating income all show a business that is clearly benefiting from the continued secular shift to online video.
The analyst stated "although we find NFLX valuation to be difficult to support, particularly given the amount of losses and competition emerging within online video, we do see where this quarter’s performance is supportive of an overall improved view on shares. As such, we are increasing our target to $101 from $77 even though our FCF estimates continue to move downward over the medium term."
Shares of Netflix closed at $99.80 yesterday.
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