Oppenheimer Cuts Price Target on Netflix (NFLX) to $114; Reiterates Outperform
Oppenheimer maintained an Outperform rating on Netflix (NASDAQ: NFLX), and cut the price target to $114.00 (from $123.00), following the company's 2Q earnings report. Revenue was largely in-line as US streaming revenue continued to outpace expenses. However both US and international streaming net adds came in below expectations.
Analyst Jason Helfstein commented, "We are lowering our price target to $114 from $123 as fears of increased churn were realized in 2Q, and will play out the rest of the year. While US net add miss was partially offset by higher ARPU, peak impact of pricing change will be in 3Q, suggesting continued risk to US subs. Higher churn blamed on "normal" vs. "inactive" users on increased press coverage around pricing change. Management reiterated that US contribution margin growth was on track. Int'l growth also remains slow, as localization efforts are taking time & money, with Turkey and Poland as next focus markets. While NFLX is best positioned to build global SVOD platform, 2016 will be a transitional year. Maintain Outperform on bullish outlook for '17 Int'l growth."
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Shares of Netflix closed at $98.81 yesterday.