Netflix (NFLX) International Growth the 'Big' Story for the Quarter, RBC Capital Says
RBC Capital analyst Mark Mahaney reiterated an Outperform rating and $550 price target on Netflix (NASDAQ: NFLX) following strong Q4 results after the close, calling international growth the "big" story for the quarter.
According to Mahaney, the Quarter Keys: Positive – 1) Domestic & International Stream Net Adds – better than expected, and Int’l guidance for Q1 ahead of the Street; 2) International Streaming Margins – Improved 560bps Y/Y to (20%) in Q4, ahead of Consensus at (24%); & 3) Strong Operating Profit - $65.0MM beat RBC/Street ests. $57.5/58.4MM on better than modeled COGS and Marketing leverage. Negative – 1) Domestic Stream Q1 Net Adds Guide – 1.80MM less than Street @ 1.96MM; 2) Weak Q1 EPS Guide– $0.60 guide below Street @ $0.81, but consensus may not have accounted for European VAT changes & FX & ongoing market launch costs; & 3) Anaemic FCF Generation Remains– negative $77MM in Q4.
The firm's 2016 revenue increases to $8.13B from $7.88B, while GAAP EPS decreases to $5.12 from $5.97, due to accelerated International launches.
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Shares of Netflix closed at $348.80 yesterday.