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SunTrust Cuts Its Price Target on NFLX on Soft Subscriber Outlook

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Analysts’ recommendations

Of the 43 analysts covering Netflix (NFLX), 28 have rated the stock as a “buy,” while only three have rated it as a “sell.” A total of 12 analysts have rated the stock as a “hold.”

Analysts have set an average target price of $388.51 on the stock, and their median consensus estimate is $410.00. On January 2, Netflix was trading at $267.66, a 34.7% discount to its consensus median estimate.

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Price target cut on Netflix

Matthew Thornton, an analyst at SunTrust Robinson Humphrey, slashed his price target on Netflix stock to $355 from $410 on January 2. According to Thornton, Netflix could miss on its fourth-quarter subscriber addition estimate. He has, however, kept his “buy” rating on the stock.

According to Thornton’s report, the company’s subscriber data were slightly lagging through November, which could result in lower-than-expected subscriber additions in the fourth quarter. However, the analyst also believes that Netflix’s recently released content, including Bird Box, Black Mirror: Bandersnatch, and Taylor Swift: Reputation Stadium Tour, should help cover the gap.

Subscriber numbers

During the third quarter, the company predicted 9.4 million subscriber additions for the fourth quarter, higher than the previous year’s global net additions of 8.33 million subscribers. The company also predicted paid subscriber additions of 7.60 million compared to 6.62 million in the previous year’s quarter.

A miss on estimates could hurt investors’ sentiments, as it did during the second quarter of 2018, when the streaming giant missed subscriber expectations for the first time in five years.

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