Netflix (NFLX) Delivers Strong Q3 Results; Shares Jump on Raised Subs Forecast - Analyst Round Up

Shares of Netflix Inc. (NASDAQ: NFLX)are up 11 percent on Thursday
following the company's strong beat in the third quarter and raised subscriber guidance.

The company reported third-quarter earnings of $38 million or 70 cents per share on Wednesday , up from $30.1 million or 52 cents per share in the same quarter last year.

Excluding one-time charges, Netflix earned 78 cents per share, 7 cents better than the analyst estimate of 71 cents per share.

Revenue for Netflix jumped 31 percent to $553.2 million from $423.1 million last year, beating the market consensus of $550.9 million

Looking forward, Netflix sharply raised its fourth-quarter subscribers guidance from 17.7-18.5 million to 19-19.7 million.

The company raised its fourth-quarter earnings guidance to a range of 59 cents to 74 cents from a prior view of 58 cents to 73 cents per share, compared to the Street's view of 74 cents per share.

Netflix also raised its fourth quarter sales guidance to a range of $586 million to $598 million from a prior view of $580 million to $596 million.

For the full year, the company narrowed its earnings guidance from $2.58-$2.86 per share to $2.68-$2.83 per share, which compares to the Street estimate of $2.79 per share. Sees full-year sales of $2.15-$2.16 billion, below the consensus of $2.17 billion.

Shares of Netflix are up 11 percent to $169.99 in midday market movement on Thursday.

Analyst Round Up

• Needham & Company sees subscriber growth possibly slowing for Netflix as soon as next year.
  
  Needham analyst says, "Even assuming that a third of departing subscribers resume the service, Netflix has had to sign up over 31 million households to reach 17 million subscribers."
  
  "The transformation of the Netflix model from a DVD rental to a video streaming company was underscored in the company’s third quarter results, led by a blowout in subscriber additions. We’re cutting our 2010 earnings per share estimate from $2.90 to $2.85 but raising our 2011 estimate from $4.00 to $4.55."
  
  Needham is maintaining a Hold rating on the stock due to valuation reasons.
  
• Janney Capital upgraded shares of Netflix from Sell to Neutral on Thursday following the company's third-quarter results. Sets a fair value estimate of $145.
  
  The firm says that Netflix is proving to be more "nimble" than its competitors.
  Janney sees benefits for Netflix including, seeing more revenue opportunities tied to cord cutting (new subs and possible increase in ARPU), new pricing models (both subscription and a la carte), and international expansion that is complemented by near-term benefits of the streaming transition and credit/debit card interchange rules.
  
• Jefferies reiterated its Buy rating and raised its price target from $175 to $195 on Netflix following the company's third-quarter results.
  
  Jefferies analyst says, "Netflix is emerging as a key winner in the digital entertainment category, given a great value proposition and astute positioning. The company's early push into streaming is paying off, with record sub growth and lowest churn/SAC in 3Q."
  
• Wedbush maintained its Underperform rating on Netflix and its price target of $78, as the firm see the company facing growth challenges beyond another year and expects the stock's premium value to contract.
  
  The firm does see Netflix benefiting from the closing of brick-and-mortar stores and the addition of new streaming agreements.
  
• Oppenheimer upgraded the stock from Perform to Outperform earlier
  
• Merriman Curhan Ford upgraded from Neutral to Buy

UPDATE: Click here to see some highlights from Netflix's Q3 conference call.

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Gilead Sciences (GILD) Misses Q1 EPS by 288c
• Phillips Edison & Company (PECO) Reports In-Line Q1 EPS, provides guidance
• Federated Hermes (FHI) Reports In-Line Q1 EPS