Piper Jaffray Remains Bullish on Netflix (NFLX) Following Solid 1Q
Piper Jaffray maintained an Overweight rating and $122.00 price target on Netflix (NASDAQ: NFLX) following the company's 1Q earnings report. NFLIX reported EPS and revenue of $0.06 on $1.96B vs. consensus at $0.04 on $1.97B. The company guided for Q2'16 domestic streaming sub adds of 500k (Street at 586K) and Q2 2016 international sub adds of 2.0M vs. Street at 3.5M.
Analyst Michael Olson commented, "Netflix reported 6.7M Q1 sub adds, with both domestic and international coming in ahead of consensus. NFLX shares were down yesterday due to Q2 international sub add guidance that is below expectations. Investor focus increasingly shifts to international as domestic faces law of large numbers, so it is not surprising that a softer int'l sub guide is negatively impacting the stock. We believe concerns of domestic saturation, competition and slower ramp of international subs, when coupled with the positives of long-term international growth potential, are reasonably reflected in our estimates and valuation methodology, which result in a NFLX price target of $122 (unchanged). We maintain our OW rating. Our PT is based on 29x 2020E EPS of $5.60, discounted back 3 years at 10%; we believe a 29x multiple is reasonable given increasing competitive pressure and given we expect 40-45% EPS growth in 2020."
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Shares of Netflix closed at $108.40 yesterday.