Analysts at Citi have reiterated their ‘Neutral’ rating on video streaming platform Netflix Inc (NASDAQ:NFLX, ETR:NFC) ahead of its upcoming third quarter earnings report, expressing skepticism about the company’s ability to achieve earnings per share of $25 in 2025.
They wrote in a note to clients that Netflix bulls' hopes of EPS of $25 next year will require 15% topline growth driven by net subscriber additions, and price hikes in the US and elsewhere.
“We believe consensus net adds of 20 million is likely (akin to 7% growth). We believe US price hikes of 12% is reasonable (akin to 3% growth). However, we do not expect non-US average revenue per user (ARPU) to rise by 5%,” they wrote.
“As such, we don’t think 2025 revenues will grow 15% nor will EPS reach $25.”
They see the stock trading higher on a US price hike announcement but expect shares to eventually trade lower as investors’ hopes of $25 in 2025 EPS are dashed.
Citi’s analysts have a $675 price target on Netflix, which traded hands at $730 on Thursday afternoon.