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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?

Netflix
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. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.