Can Netflix’s quarterly figures outperform again?

Last quarter Netflix was able to post an increase of 3.3 million new subscribers – outpacing expectations in this vital area – can it keep that pace up?

Source: Bloomberg

When Netflix posted its last set of quarterly figures at the beginning of July, it triggered a run in the share price up to an all-time high of over $126 from $95. New subscribers are the lifeblood of this company and businesses in this sector. Over 60% of US TV owners have an account with Netflix. As the company has strived to broaden the income flow from these accounts it has diversified away from what had been its core business model. Netflix no longer just facilitates the distribution of subscription content, but is now a larger player in the content creation arena and, so far, has had more hits than misses.

On Wednesday 14 October after the market close Netflix is due to post its third-quarters figures The adjusted earnings per share are called to drop from $0.181 to $0.102 year-on-year. In this same time period sales are called to increase from $1.409 Billion up to $1.75 billion, while the pre-tax profit is called to drop from $97.537 million in 2014 down to $51.44 million in 2015. Institutional support for the company still remains resilient with 23 buy recommendations, 16 holds, and six sells. The average 12-month price target for the company is $117.38 which is still offering a 9.9% price premium on the current market price of $106.80.

Since January 2013 Netflix has continued to set a succession of higher highs. Should it be able to post equally impressive subscriber numbers as last quarter, a fresh charge towards $126 could well be achieved. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.