Piper Jaffray Maintains Bullish View on Netflix (NFLX) Despite U.S. & Intl Subs Miss
Piper Jaffray analyst Michael Olson reiterated an Overweight rating and $122 price target on Netflix (NASDAQ: NFLX) following Q2 results which included a miss on U.S. and Intl subs.
Olson commented, "Netflix reported 1.7M Q2 sub adds, with both domestic and international coming in below consensus. The company indicated that a higher-than-expected level of customer churn negatively impacted net adds in the quarter and will likely continue to be an issue in Q3. We believe concerns of domestic saturation, impact from "un-grandfathering" of fees and Olympics, 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."
The firm bumped FY 2016 EPS from $0.26 to $0.30 and trimmed FY 2017 EPS from $1.39 to $1.38.
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Shares of Netflix closed at $98.81 yesterday.