Netflix Inc (NFLX)

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Earnings Preview: Netflix Inc. (NASDAQ: NFLX)
By: 24/7 Wall St. | July 18, 2022

• Here is a look at five firms on deck to report results late Tuesday or first thing Wednesday morning.

Netflix

Netflix Inc. (NASDAQ: NFLX) posted its 52-week high in mid-November. Since then, the stock price has dropped by 73%. The biggest losses came after Netflix reported quarterly results in January and April. Net new subscriber numbers did not rise as expected in the last quarter of 2021 and actually declined in the first quarter of this year. Netflix estimated more (and bigger) subscriber losses in the second quarter.

How can a growth company continue to grow with those numbers? One way is by adding a new revenue stream in the form of a new, cheaper ad-supported version through a partnership with Microsoft. Expect to hear more details about that when Netflix reports results after markets close Tuesday.

Of 45 analysts covering the stock, 15 have a Buy or Strong Buy rating, while another 24 rate the shares at Hold. (Note that at the end of the first quarter, that ratings split was exactly the opposite.) At a share price of around $189.10, the upside potential based on a median price target of $245.00 is almost 30%. At the high price target of $673.00, the upside potential is about 256%.

Second-quarter revenue is forecast at $8.06 billion, up 2.1% sequentially and by 9.4% year over year. Adjusted EPS are forecast at $2.95, down 16.3% sequentially and less than 0.1% lower year over year. For the full 2022 fiscal year, analysts expect to see EPS of $10.79, down 4%, on sales of $32.25 billion, up 8.6%.

Netflix shares trade at 17.5 times expected 2022 EPS, 15.8 times estimated 2023 earnings of $12.00 and 13.3 times estimated 2024 earnings of $14.26 per share. The stock’s 52-week range is $162.71 to $700.99. Netflix does not pay a dividend. Total shareholder return for the past 12 months was negative 65.2%.

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