Netflix Price Target Cut at UBS-Subscriber Declines in Line with Guidance
2022.07.15 23:59
UBS analyst John Hodulik maintained a Neutral rating on Netflix (NASDAQ:NFLX) while cutting the firm’s price target to $198 from $355 per share in a note to investors Friday.
The analyst stated the firm expects the streaming giant’s second-quarter subscriber declines to be in line with guidance while providing a cautious second-half outlook.
“We believe subs tracked in-line with mgmt’s guide for 2.0M losses in 2Q, driven by LSD declines in gross adds & higher churn following price increases in UCAN/parts of Europe,” said Hodulik.
He added that while the year’s second half is “seasonally stronger,” they expect cautious guidance due to macro uncertainty.
“We look for 1.3M adds in 3Q (prior 2.8M; street 1.9M), down from 4.4M in 3Q21 given a thinner content slate, and 2.8M for the yr (prior 5.4M; street 5.7M),” wrote Hodulik. “We expect UCAN ARPU growth to accelerate in 2Q given a full qtr’s benefit of price increases while trends in LatAm/EMEA remain healthy (ex FX) and Apac sees pressure following the Dec. price cut in India. We are lowering 2Q est. to reflect FX pressure and expect 1-3% downside to mgmt’s 2Q outlook. We look for 7.3% rev growth in ’22E (prior 8.1%) while growth initiatives & FX pressure drive just 1.8% yoy EBITDA growth (prior 3.4%) and 19.3% EBIT margins, down 160 bps yoy.”
