Analysts Continue to Lower Price Targets on Netflix (NFLX) Ahead of 4Q Earnings Report

January 14, 2022 8:47 AM EST
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Price: $372.27 +1.60%

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    35 Buy, 26 Hold, 6 Sell

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Since the beginning of January until yesterday, at least three Street analysts lowered their price target on Netflix (NASDAQ: NFLX) as they expect soft earnings.

JPMorgan, Stifel, and MoffettNathanson all lowered price targets and today they were joined by Goldman Sachs and UBS.

Goldman’s Eric Sheridan lowered the price target to $580.00 per share from $595.00 on Neutral-rated NFLX stock to reflect lowered operating estimates.

Three key reasons behind the PT cut are 1) the pace of subscriber net additions, 2) the mix of forward content slate, and 3) forward content investments necessary to continue to broaden local language and long form movie content.

“While we remain highly confident in a strong content slate (with that trend beginning in Q4 ’21), we see content as less of a dramatic driver of gross addition trends in coming quarters and likely an element of the broader industry pricing and competitive dynamics that could contribute to a mix of rate of change in revenue and margin trends in the years ahead. In terms of operating estimates, our changes were the result of weaker industry data for Q4 & a reaction to company price cuts in India,” Sheridan said in a client note.

UBS analyst John Hodulik reiterated a Buy rating and lowered the price target to $690.00 per share from the prior $720.00. The analyst lowered 4Q net adds to 7.0 million from 8.9 million prior and guidance of 8.5 million.

“We believe net adds accelerated in 4Q but came in below mgmt's guide as the momentum faded through the quarter (vs. the late Sep launch of Squid Games) and the seasonal pick-up in December lagged prior years. This is despite the robust content slate, suggesting the industry is still digesting outsized growth from the pandemic. We believe this is priced in however with the stock -25% from its November highs,” Hodulik wrote.

On a more positive note, Loop Capital Markets analyst Alan Gould reiterated a Buy rating and a $700.00 per share price target on NFLX stock. He believes selling is overdone and sees the recent pullback as an “excellent setup leading into NFLX’s earnings next week.”

“We understand the rotation out of high price to sales stocks with rising interest rates, but NFLX’s stock price is no longer predicated on discounting earnings way in the future, the stock now sells at just 30x next year’s earnings, close to the same multiple as Disney. The stock is down 26% since mid-November and 14% year-to-date as numerous previews provided cautious commentary,” Gould wrote in his report.

Netflix stock price is down 0.6% in pre-open Friday.

By Senad Karaahmetovic | senad@streetinsider.com



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