Q1 Preview: Netflix (NFLX) Being Kind, But Not Rewinding

Netflix, Inc. (Nasdaq: NFLX) is trading higher Thursday ahead of the company's first-quarter earnings report, expected out after the market close on Monday. At last check, Netflix shares are up 2 percent to $249.38.

The Street is currently looking for Netflix to report EPS of $1.07 on revenue of $703.6 million. The Los Gatos, CA-based video-stream and DVD delivery service issued EPS of $0.87 on sales of $596 million during the fourth quarter of 2010. A year ago the company posted EPS of $0.59 on revs of $493.7 million.

Shares gained 33.3 percent over the quarter and are up about 4.9 percent since.

Netflix is trading at a P/E of 39.2x FY12 EPS estimates, compared with 13.9x at Coinstar (Nasdaq: CSTR), and 42.2x at Amazon.com (Nasdaq: AMZN).

Data from Bloomberg has 11 analysts with a Buy on Netflix, 12 with a Hold, and five suggesting to Sell. The analyst price target average is $220.50, with a high of $316 and low of $80. Shares have traded in a range of $250.00 - $82.77 over the last 52-weeks.

Analyst Summary

• Wedbush looking for EPS of $1.13 on revs of $715 million. Sees ending subscribers at 23.7 million and believes Netflix will be able to offset declining ARPU with its $7.99 per month plan and continued penetration into home gaming consoles and other consumer electronics devices.
  
  Dish Network's (Nasdaq: DISH) recent acquisition of Blockbuster should be a boon for Netflix, as Dish plans to liquidate Blockbuster's assets. Many customers should move to Netflix or Redbox (owned by Coinstar), according to Wedbush. Wedbush also expects streaming content costs to increase by $500 million at the low-end in 2011. The firm is looking for costs to surge from $180 million in FY10 to $1.975 billion by FY12.
  
  
• Jefferies is looking for EPS of $1.11 and revs of $696.7 million. Additionally, Jefferies is looking for subs 23.5 million, with net adds of 3.5 million. Jeffries is also looking for rapid acceleration of costs for Netflix, from $940 million in FY11 to $1.229 billion in FY12.
  
  
• Credit Suisse recently upgraded the shares from Neutral to Outperform. Key factors to the upgrade include: headline risk from new competition is more fully reflected in shares, based on its proprietary survey, the firm does not expect a material impact on Netflix from Amazon (Nasdaq: AMZN) Prime Instant Video, and the company's international expansion and an appealing valuation.

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results withi0 n seconds of the release.

---

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

---

You May Also Be Interested In

• Walmart (WMT) PT Lowered to $130 at UBS on Investment Narrative's Competing Dynamics
• BMO starts chip stocks coverage: Here are its preferred picks
• Vireo Growth completes acquisition of C21 Investments