Netflix, Inc. (NASDAQ:NFLX) Just Reported And Analysts Have Been Lifting Their Price Targets

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Netflix, Inc. (NASDAQ:NFLX) last week reported its latest first-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like the results were a bit of a negative overall. While revenues of US$5.8b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.2% to hit US$1.57 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Netflix after the latest results.” data-reactid=”19″>Netflix, Inc. (NASDAQ:NFLX) last week reported its latest first-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It looks like the results were a bit of a negative overall. While revenues of US$5.8b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.2% to hit US$1.57 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what the analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Netflix after the latest results.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content=" Check out our latest analysis for Netflix ” data-reactid=”20″>Check out our latest analysis for Netflix

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Taking into account the latest results, the most recent consensus for Netflix from 36 analysts is for revenues of US$24.7b in 2020 which, if met, would be a decent 16% increase on its sales over the past 12 months. Per-share earnings are expected to leap 27% to US$6.46. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$24.4b and earnings per share (EPS) of US$5.99 in 2020. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 16% to US$438. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Netflix at US$580 per share, while the most bearish prices it at US$160. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Netflix’s revenue growth is expected to slow, with forecast 16% increase next year well below the historical 26%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% next year. Even after the forecast slowdown in growth, it seems obvious that Netflix is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Netflix following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Netflix going out to 2024, and you can see them free on our platform here..” data-reactid=”38″>With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Netflix going out to 2024, and you can see them free on our platform here..