Netflix stock has been moving sideways ahead of the company's first-quarter earnings report next week. Investors will be closely watching the streaming video leader's subscriber and advertising metrics.
The Los Gatos, Calif.-based company will post March-quarter results late Thursday.
Analysts polled by FactSet expect Netflix to earn $4.51 a share on sales of $9.27 billion in the first quarter. That would translate to year-over-year growth of nearly 57% in earnings and 14% in revenue. It also would mark the company's third straight quarter of accelerating sales growth.
Analysts predict Netflix will add 4.88 million net new subscribers in the first quarter. It ended 2023 with 260.28 million subscribers worldwide.
Netflix Stock Dips On Friday
On the stock market today, Netflix stock slid 1% to close at 622.83.
On Friday, Morgan Stanley analyst Benjamin Swinburne reiterated his overweight rating on Netflix stock and upped his price target to 700 from 600.
In a client note, he predicted that Netflix will see a compound annual growth rate for its earnings per share of 25% from 2024 through 2028.
Swinburne also said Netflix has underappreciated competitive advantages in its original programming, content from outside the U.S., and its deep library.
Popular original TV series on Netflix in the first quarter included "3 Body Problem," "Avatar: The Last Airbender" and "Fool Me Once." Major original movies on the service included "Damsel," "Rebel Moon — Part One: A Child of Fire" and "Society of the Snow."
Q1 Expectations Appear Elevated
Elsewhere on Wall Street, Piper Sandler analyst Matt Farrell late Thursday maintained his neutral rating on Netflix stock but raised his price target to 600 from 550.
Expectations for Netflix's Q1 report seem elevated compared with the last few quarters, Farrell said.
"Sentiment has shifted from 'better than feared' in Q3 to 'how big is the beat' today," he said in a client note.
Meanwhile, the scale of Netflix's advertising-supported service tier is lagging expectations, Farrell said.
"We continue to wait for the pivot to 'walking' from 'crawling,' but as the ad-tier competitive landscape intensifies, we suspect scale needs to happen sooner rather than later," he said.
Plentiful Competition In Streaming Video
In streaming video, Netflix competes with Amazon, Disney, Warner Bros. Discovery and others.
On Thursday, Amazon revealed that its Prime Video service has 200 million customers. However, it's unclear if that number includes active viewers, since all subscribers to the e-commerce giant's Prime service have access to Prime Video.
On Monday, TD Cowen analyst John Blackledge raised his price target on Netflix stock to 725 from 600. He rates it as buy.
Netflix is benefiting from the tailwinds of its paid-sharing initiative and the ramp of its advertising business, Blackledge said.
Netflix stock is on three IBD stock lists: IBD 50, Big Cap 20 and Stock Spotlight.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
