- Analysts were divided on their opinions on Netflix Inc (NASDAQ:NFLX) ahead of its quarterly results this week.
- KeyBanc analyst Justin Patterson notes that Netflix's price increase was more significant than anticipated, which he believes implies a 1% lift to his/Street 2022 revenue.
- Nonetheless, the analyst has unchanged estimates due to the proximity of earnings, which should shed light on UCAN and international performance, confidence in 2022's content slate, and investment levels.
- Patterson maintained an Overweight rating and a price target of $620 on the shares (17.9% upside). He believes Netflix is better able to weather industry challenges than peers and is still poised for greater than 20% annual EPS growth.
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- JPMorgan analyst Doug Anmuth believes the price increase Netflix announced on Friday will drive an incremental $1 billion-plus revenue in 2022.
- Each successive price increase "could drive a bit more friction," but Netflix is willing to trade off a small number of subscribers for incremental revenue, and most of them come back anyway, Anmuth notes.
- He thinks the incremental revenue will help finance increased content spending, which he projects at $19 billion in 2022 cash costs, and "also add some cushion to operating margin expansion." Anmuth keeps an Overweight rating on Netflix with a $725 price target (37.9% upside).
- Wedbush analyst Michael Pachter notes that a week before its Q4 report, Netflix announced price increases in its UCAN region.
- The analyst also points out that typically, the company raises prices when its subscriber additions are substantial, so he suspects that chatter about a subscriber "miss" may be misguided.
- Pachter has an Underperform rating and a price target of $342 on the shares (34.9% downside).
- Deutsche Bank analyst Bryan Kraft lowered the price target on Netflix to $580 from $590 (10.3% upside) and reiterated a Hold rating on the shares.
- Third-party data that is used to gauge the company's Q4 net additions "has not been encouraging," Kraft tells investors in a research note.
- The analyst's analysis of Google trends data leads him to lower his Q4 net add an estimate to 7.25 million compared to Netflix's guidance of 8.5 million.
- Price Action: NFLX shares traded lower by 1.12% at $519.78 in the premarket session on the last check Tuesday.
