Netflix (NASDAQ:NFLX) is due to report earnings next week with the Street calling for EPS of $2.90 on sales of $7.93 billion.
Heading into earnings, Goldman Sachs analyst Eric Sheridan lowered the price target to $420.00 per share from $450.00 on the Neutral-rated NFLX shares to reflect lower estimates - from 21 million to 17 million for 2022 net adds - and continued margin pressure.
“In order to get more constructive on NFLX, we continue to be focused on post-pandemic normalization, a lessening of media consumption competitive intensity, clearer line of sight into more moderate content spend growth and/or sustainable FCF generation that can fund share buybacks,” Sheridan said in a client note.
Similarly, KeyBanc analyst Justin Patterson has reiterated a Sector Weight rating on Netflix ahead of a potentially “noisy” report. Overall, the analyst lowered 2022E/2023E EPS by 1%/6%, respectively.
“We believe 1Q paid net adds benefited from a stronger content line-up in Asia, which should partially offset a ~1M drag from Russia, resulting in our new estimate of 2.1M (prev. 2.5M). While positive, we believe further FX headwinds, inflation, and competition elevate risk to 2022E/2023E revenue/EPS. Until these pressures subside, we remain skeptical operating margin can return to ~300 bps annual expansion,” Patterson wrote in a client note.
Netflix stock is down 1.6% in pre-open Monday.
By Senad Karaahmetovic