After surveying 1,500 U.S. Netflix subscribers to assess their reaction to the company’s price hikes moving forward, the analyst said that he does not believe that Neflix’s subscriber base will drop significantly following an upcoming price increase.
The survey indicated that only 3%-4% of Netflix’s U.S. subscribers may cancel the service due to the price increase. Additionally, the survey suggested that Netflix could raise its U.S. prices further, the analyst stated. According to Olson, 55 percent of subscribers said they would not drop Netflix unless the price was increased to more than $15 per month. The note highlighted the fact that with pricing related surveys responses are usually more negative than reality “as customers typically suggest a lower willingness to absorb a higher price than what they’re actually willing to do in the event of raised prices.”
Olson reiterated an ‘Overweight” rating and $122 price target on NFLX stock, implying more than 25% expected return.
Alongside Piper Jaffray, Dougherty & Co. also issued a research report on Netflix stock ahead of next week’s Q2 report noting they expect the streaming service’s second-quarter to be in-line with guidance and consensus. Wall Street analysts are on average expecting the video streaming giant to post $2.11 billion in sales during the quarter. This would show a 7.65% increase from the first-quarter 2016 revenue of $1.96 billion, and an increase of 28.66% from the same period in Q215. EPS in 2Q16 are expected to come in at $0.02, a decline rate of 67 percent from $0.06 per share a year earlier. Meanwhile, EarningsWhisper.com reports a whisper number of $0.04 per share.
For the full fiscal-year 2016, Dougherty & Co’s subscriber targets are for 5.1 million in domestic sub additions and 7 million in international ones. The firm said they don’t believe there should be any surprises in the 2Q16 results, especially given what the firm considers conservative subscriber addition targets.
Shares of Netflix, Inc. have a trailing-12 and forward P/E of 330.74 and 94.94, respectively. P/E to growth ratio is 15.58, while t-12 profit margin is 1.77%. EPS registers at $0.29. The company has a market cap of $41.08 billion and a median Street price target of $120 with a high target of $150.
On trading-measure, in the past 52 weeks, shares of Los Gatos, California-based company have traded between a low of $79.95 and a high of $133.27 with its 50-day MA and 200-day MA located at $95.65 and $97.63 levels, respectively. Additionally, shares of NFLX trade at a P/E ratio of 15.58 and have a Relative Strength Index (RSI) and MACD indicator of 55.43 and +3.21, respectively.
As far as Netflix stock technicals are concerned, the chart continues to print lower-lows in the past six-month time frame. It is to be noted here that shares are now up 12.8 percent, probing their 2-week highs along the $95-$96 area. The stock has broken past its $95 resistance and extended as high as $97. Some digestion at current levels could set it up short-term for a scalp trade and a move higher towards next resistance level at $98.
NFLX currently prints a one year loss of 2.63 percent, and a year-to-date loss of around 17 percent.