Netflix, Inc. (NASDAQ: NFLX)
As we transition into the summer months, trading volumes and volatility tend to subside which can bring a lack of tradeable action for the average trader and investor alike. However, NFLX is a momentum name which many will gravitate toward when trading is slow in anticipation that other traders are doing the same which in turn could bring profitable trading opportunities.
As NFLX approaches its second quarter 2016 earnings report on July 18th, it will be a great name to keep on close watch and take advantage of the volatility into and after the report.
Anthony DiClemente, an analyst at Nomura Securities had to following comments on NFLX as we approach their next earnings report.
Lowering International Subscriber Estimates. Ahead of Netflix’s 2Q16 earnings report on July 18th, we take a closer look at our 3Q16 and4Q16 estimates. We believe that Netflix’s international launches in 2H15 (Japan in 3Q15 and Southern Europe in 4Q15) may presage difficult YoY growth comparisons for international subscriber addition estimates in 2H16. As such, we modestly lower our international net additions estimates for 3Q16 and for 4Q16. Secondarily, we also revisit our analysis of the revenue benefit from US pricing increases that began in May 2016; we are cognizant, however, that modest subsequent churn may simultaneously prove a modest headwind to 2H16 US net additions. While we maintain our bullish long-term view, given how focused NFLX investors remain on the near-term international subscriber additions trends, we are inclined to modestly lower our Target Price to $115, as we modestly reduce our target valuation multiples on the Netflix international streaming business given more moderate growth assumptions. FY16E EPS at $0.29; FY17EEPS at $1.15.
About Netflix, Inc.
Netflix, Inc. (Netflix), incorporated on August 29, 1997, is a provider of Internet television network. The Company’s members can watch original series, documentaries and feature films in Internet-connected screen. The Company has three operating segments: Domestic streaming, International streaming and Domestic DVD. The Domestic and International streaming segments derive revenues from monthly membership fees for services consisting of streaming content. The Domestic DVD segment derives revenues from monthly membership fees for services consisting of digital video disc (DVD)-by-mail. The Company’s members can watch television shows and movies directly on their televisions, computers and mobile devices. The Company offers streaming service both domestically and internationally. Its members can play, pause and resume watching, without commercials or commitments. Additionally, in the United States, the Company’s members can receive DVDs to their homes. – Reuters