In a report published Monday, Pacific Capital’s Andy Hargreaves urged longs to buy Netflix (NFLX) stock ahead of earnings noting that fears about the company’s U.S. subscriber guidance is overdone and short sighted.
The analyst affirmed his ‘Overweight’ rating and $140 PT on the name — currently trading at 99x FY2017 earnings estimates, and more than 377x FY2016 forecasts — saying he expects the video-streaming services’ 2Q outlook for U.S. net subscriber additions to be about 260,000. While Hargreaves’ estimate is below current consensus analyst projections, the analyst believes international subscriber additions could “meaningfully” beat forecasts.
“Investors are currently embroiled in a heated debate over a few hundred thousand U.S. subscribers,” Hargreaves wrote in his note to clients. “In the meantime, Netflix’s global expansion creates potential upside that is measured in the millions.”
“Don’t step over quarters to pick up dimes,” Hargreaves said. “Buy [Netflix].”
The Los Gatos, California – based company is expected to report 1Q16 earnings on April 18 after market close. The report will be for the fiscal quarter ending March 2016.
So far this morning, NFLX is indicated flat/$105.65 and now stands +79% higher off early April 2015 lows near $59.