Netflix (NFLX): Q3 Looks OK But Don't Be Surprised By A Conservative Guide - Nomura
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Nomura Securities analyst, reiterated his Buy on Netflix (NASDAQ: NFLX) but acknowledges that two quarters of difficult international comps are ahead for the company. In the US, the analyst believes 3Q subscriber growth may be impacted by churn associated with effective price increases and the Olympics; however, strong YoY content compares could provide an offset. Looking ahead to the 4Q, in the US, churn could improve owing in part to the expected Comcast X1 integration, the rollout of Disney movie and other new content, and completion of pricing ungrandfathering.
Internationally, 3Q represents an easier new market compare than 2Q16 due to Japan. Checks found 3Q strength in W. Europe, offset by slowing growth in Latin America. The analyst expects a conservative 4Q int’l guide as Netflix compares to the S. Europe launch in the 4Q15.
NFLX is up 20% since 2Q earnings (possibly on take-out speculation), but the analyst thinks the company's near-term sub growth headwinds will be offset by the strategic nature of Netflix within the media helps providing a valuation floor.
No change to the price target of $110.
Shares of Netflix closed at $100.59 yesterday.
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