Canaccord Genuity Raises Price Target on Netflix (NFLX) Following 3Q15 Earnings Results
Canaccord Genuity reiterated a Buy rating on Netflix (NASDAQ: NFLX), and raised the price target to $125.00 (from $120.00), following the company's 3Q15 earnings results. For the first time since the 3Q14 report, Netflix reported weaker-than-expected results versus guidance and consensus expectations. Canaccord does not believe that the results weaken their long-term thesis, and is prepared for continued volatility regarding subscriber adoption.
Analyst Gregory Miller commented, "Netflix reported weaker-than-expected results after the market close this evening, with key performance indicators (i.e., net subscriber additions) significantly below expectations. In addition, revenue was weaker than expected due to lower domestic subscribers and incremental currency pressures weighing on the international operations. While the domestic subscriber additions were surprisingly weak, management identified the ongoing transition to chip-based credit and debit cards as causing higher-than-expected involuntary churn. Importantly, management believes the company remains on track to add about as many US subscribers as in 2014, and reiterated previous long-term goals for domestic subscribers and contribution margins. Overall, while the shortfall in subscriber additions is disappointing and merits close attention (as always) going forward, we continue to believe our long-term thesis of the company using its first-mover advantage to create the premier global SVOD OTT platform is intact. As such, we reiterate our BUY rating and, on the back of recently announced price increases, raise our DCF-based target to $125."
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Shares of Netflix closed at $110.23 yesterday.