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The Zacks Analyst Blog Highlights: Netflix, Amazon, Apple, Disney and Facebook
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For Immediate Release
Chicago, IL – July 12, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Disney (DIS - Free Report) and Facebook .
Here are highlights from Wednesday’s Analyst Blog:
Everything You Need to Know About Netflix (NFLX - Free Report) Ahead of Q2 Earnings
Shares of Netflix have skyrocketed over the last year as investors continue to love the growth prospects of the streaming TV and movie giant. Now the question is what should they expect going forward from Netflix as the internet-connected TV space becomes more crowded.
Business & Industry Overview
Netflix might be the unquestioned streaming king at the moment, but Amazon Prime, Hulu, and others have plans for expansion. Meanwhile, Apple has spent heavily to scoop up an array of Hollywood talent both in front of and behind the camera for a 2019 launch of some-type of streaming TV service, with Disney’s much-anticipated stand-alone over-the-top streaming platform scheduled to launch in late 2019 (also read: Assessing Apple's Streaming Push to Take on Spotify & Netflix).
But the competition doesn’t seem to scare Netflix since it has anticipated the rise of streaming content and the slow death of linear, commercial-based television for years. “In a few decades, linear TV will be the fixed-line telephone: a relic,” the company wrote in its long-term outlook overview. And this is why Netflix has ramped up its original content spending for years because having programming worth paying for is really the company’s core business—a model HBO has proven for years.
Netflix noted that it expects to spend close to $8 billion on a profit and loss basis on content in 2018, while also shelling out roughly $2 billion on marketing.
The streaming company also plans to spend around $1.3 billion on technology and development this year. Some have speculated that Netflix might eventually expand beyond its current on-demand TV and movie model to offer some live news or sports, with the likes of Facebook and others jumping into live content. Yet, for now, Netflix maintains that it is a “movie and TV series entertainment network” and will not stream other types of video.
Netflix has landed some big names to produce new content for the platform, which will be needed to entice new customers but even more valuable for keeping current users. It is also worth noting that Netflix’s content is pretty much unlimited in duration, in the sense that a user can begin an older series, such as House of Cards, for the first time years after its debut.
Outlook
The company added 7.41 million new members in the first quarter, which marked a 50% jump from the year-ago period and topped the company’s forecast of 6.35 million. The streaming company closed the quarter with 125 million members. Looking forward, Netflix expects to add 6.2 million new members to bring its total to 131.2 million, which would represent a roughly 26% surge from the year-ago period when the company closed the quarter with 103.95 million members.
More specifically, Netflix expects to add 1.2 million new users in the U.S. to bring the total to roughly 58 million, up approximately 11.5%. The U.S. market is by far its most saturated, but the company still maintains that it can grow to between 60 to 90 million members in the U.S., based upon its trajectory to date and the continued growth of internet entertainment.
The company projects it will expand its international user base by 5 million in Q2, to hit 73.29 million, which would mark a roughly 41% surge from the 52 million it claimed at the end of the second quarter of 2017. Netflix, which is currently available almost everywhere except China, could become even more massive if it is able to sell its service in the world’s second-largest economy. But this is certainly a big if.
Over the last month, analysts have upped their NFLX price targets in big ways. Goldman analysts reiterated the firm’s buy rating for NFLX and upped their price target from $390 per share to $490 per share. GBH Insights upped its price target to a whopping $500 per share, less than a week after Goldman, which marked the highest out of the 36 analysts who cover Netflix, according to FactSet—shares of Netflix closed Monday at $415.63.
"Our bullish thesis on Netflix is based on our belief that the company's competitive moat, franchise appeal, ability to increase international streaming customers through 2020, and original content build out will translate into robust profitability and growth," GBH analyst Daniel Ives wrote in a note to clients.
Bottom Line
Our current Zacks Consensus Estimates are calling for Netflix’s Q2 revenues to surge by 41.32% to reach $3.94 billion. The company’s full-year revenues are expected to climb by nearly 38% to touch $16.12 billion.
At the other end of the income statement, Netflix’s adjusted Q2 earnings are projected to skyrocket 433% from $0.15 per share in the prior-year period to $0.80 per share. For the full-year, the company’s earnings are expected to climb by 131% to touch $2.89 per share.
Netflix is set to release its Q2 financial results after the closing bell on Monday, July 16.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Netflix, Amazon, Apple, Disney and Facebook
For Immediate Release
Chicago, IL – July 12, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Netflix (NFLX - Free Report) , Amazon (AMZN - Free Report) , Apple (AAPL - Free Report) , Disney (DIS - Free Report) and Facebook .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday’s Analyst Blog:
Everything You Need to Know About Netflix (NFLX - Free Report) Ahead of Q2 Earnings
Shares of Netflix have skyrocketed over the last year as investors continue to love the growth prospects of the streaming TV and movie giant. Now the question is what should they expect going forward from Netflix as the internet-connected TV space becomes more crowded.
Business & Industry Overview
Netflix might be the unquestioned streaming king at the moment, but Amazon Prime, Hulu, and others have plans for expansion. Meanwhile, Apple has spent heavily to scoop up an array of Hollywood talent both in front of and behind the camera for a 2019 launch of some-type of streaming TV service, with Disney’s much-anticipated stand-alone over-the-top streaming platform scheduled to launch in late 2019 (also read: Assessing Apple's Streaming Push to Take on Spotify & Netflix).
But the competition doesn’t seem to scare Netflix since it has anticipated the rise of streaming content and the slow death of linear, commercial-based television for years. “In a few decades, linear TV will be the fixed-line telephone: a relic,” the company wrote in its long-term outlook overview. And this is why Netflix has ramped up its original content spending for years because having programming worth paying for is really the company’s core business—a model HBO has proven for years.
Netflix noted that it expects to spend close to $8 billion on a profit and loss basis on content in 2018, while also shelling out roughly $2 billion on marketing.
The streaming company also plans to spend around $1.3 billion on technology and development this year. Some have speculated that Netflix might eventually expand beyond its current on-demand TV and movie model to offer some live news or sports, with the likes of Facebook and others jumping into live content. Yet, for now, Netflix maintains that it is a “movie and TV series entertainment network” and will not stream other types of video.
Netflix has landed some big names to produce new content for the platform, which will be needed to entice new customers but even more valuable for keeping current users. It is also worth noting that Netflix’s content is pretty much unlimited in duration, in the sense that a user can begin an older series, such as House of Cards, for the first time years after its debut.
Outlook
The company added 7.41 million new members in the first quarter, which marked a 50% jump from the year-ago period and topped the company’s forecast of 6.35 million. The streaming company closed the quarter with 125 million members. Looking forward, Netflix expects to add 6.2 million new members to bring its total to 131.2 million, which would represent a roughly 26% surge from the year-ago period when the company closed the quarter with 103.95 million members.
More specifically, Netflix expects to add 1.2 million new users in the U.S. to bring the total to roughly 58 million, up approximately 11.5%. The U.S. market is by far its most saturated, but the company still maintains that it can grow to between 60 to 90 million members in the U.S., based upon its trajectory to date and the continued growth of internet entertainment.
The company projects it will expand its international user base by 5 million in Q2, to hit 73.29 million, which would mark a roughly 41% surge from the 52 million it claimed at the end of the second quarter of 2017. Netflix, which is currently available almost everywhere except China, could become even more massive if it is able to sell its service in the world’s second-largest economy. But this is certainly a big if.
Over the last month, analysts have upped their NFLX price targets in big ways. Goldman analysts reiterated the firm’s buy rating for NFLX and upped their price target from $390 per share to $490 per share. GBH Insights upped its price target to a whopping $500 per share, less than a week after Goldman, which marked the highest out of the 36 analysts who cover Netflix, according to FactSet—shares of Netflix closed Monday at $415.63.
"Our bullish thesis on Netflix is based on our belief that the company's competitive moat, franchise appeal, ability to increase international streaming customers through 2020, and original content build out will translate into robust profitability and growth," GBH analyst Daniel Ives wrote in a note to clients.
Bottom Line
Our current Zacks Consensus Estimates are calling for Netflix’s Q2 revenues to surge by 41.32% to reach $3.94 billion. The company’s full-year revenues are expected to climb by nearly 38% to touch $16.12 billion.
At the other end of the income statement, Netflix’s adjusted Q2 earnings are projected to skyrocket 433% from $0.15 per share in the prior-year period to $0.80 per share. For the full-year, the company’s earnings are expected to climb by 131% to touch $2.89 per share.
Netflix is set to release its Q2 financial results after the closing bell on Monday, July 16.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.