Netflix (NFLX) Earnings; Why Top Firms Just Cut their Price Targets

Analysts may not be confident on Netflix (NFLX) earnings after the bell.

But don’t count the stock out just yet. 

Many believe a good deal of negativity may have been priced in already with subscription growth concerns, poor second quarter results, and the introduction of more platforms in the streaming space.  With tonight’s release, investors will pay close attention to whether Netflix can hit its forecast of seven million net subscriber additions.

Making things a bit tougher, firms have lowered their price targets in recent weeks, as well.

Morgan Stanley Lowered Target from $450 to $400

With an overweight rating, Morgan Stanley noted, “The risk is that Netflix lacks the content ‘franchises’ to prevent consumers from hopping in and out of the service, keeping churn elevated. At the same time, new streaming options on the margin could shave off some gross additions,” as quoted by Business Insider.

UBS Has a Buy Rating, but Reduced Target to $370 from $420

“We modestly lower our EV/GAAP EBITDA and EV/(FCF-SBC) multiples to reflect our more conservative view of an increasingly competitive environment in the near-to- medium term,” UBS analyst Eric Sheridan said, as also quoted by Business Insider.

Goldman Sachs Also Has a Buy Rating, but Reduced Target to $360 from $420

“In 3Q, we expect 0.7mn domestic and 6.0mn international paid net subscriber additions, modestly below guidance,” Goldman Sachs wrote, as noted by Business Insider.  

“With NFLX trading at nearly a 5-year low on an NTM EV/EBITDA basis, reflecting uncertainty around results and competition, we remain Buy rated (CL), though our 12-month price target goes to $360 from $420.”