With Netflix Inc (NASDAQ:NFLX) earnings coming on Wednesday, analysts at UBS have reduced their price target for the company to $500 from $525 in a note to clients.
Shares of Netflix closed 1.5% higher Monday at $360.82.
Wall Street analysts expect the streaming company to report earnings of $3.47 per share on revenue of about $8.5 billion, which represents year-over-year growth of 7.5%.
“We expect 3Q results to be largely in-line with expectations, including similar subscription net adds and accelerating revenue,” analysts wrote. “...We also expect solid commentary for 4Q, including seasonally stronger subscription adds as well as further acceleration in revenue growth and stronger year-over-year margins.”
However, UBS decreased its 2024 revenue estimate due to “a more gradual build in ad and more measured margin expansion due to higher content amort and other investments.”
Netflix said when handing down its second-quarter earnings in July that it expects revenue growth to accelerate in the second half of 2023 as monetization grows from its paid sharing launch and its ad-supported plan.
UBS said it remains optimistic.
“We believe paid sharing is being enforced in phases, mitigating the impact on churn,” the analysts wrote. “As a proxy for potential churn, we monitor Google search interest in ‘cancel Netflix’, which saw less inflection in key markets launched in 2Q/3Q vs. the pick up in Canada/Spain in 1Q.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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