Netflix UCAN subscriber results will be ‘significantly stronger’ than consensus – BofA

By Sam Boughedda

Netflix (NASDAQ:) subscriber results for the US and Canada will be “significantly stronger than current consensus,” according to BofA analysts citing third-party data.

The current consensus is for +100K adds, according to the analysts, while BofA’s estimate is for a loss of 350K. The analysts maintained a Buy rating and $410 price target on the stock in their research note.

“Specifically, the data source has indicated that net adds will be greater than +500k for UCAN as gross adds in Canada have accelerated materially,” they wrote. “In addition to the data indicating net adds will be much better than current estimates, the new data also counters previous third-party data that UCAN sub results were trailing expectations.”

The analysts added that it aligns with management commentary that churn initially will increase and then quickly reverse, while they believe the password sharing crackdown will “result in a greater number of subs and revenue as primary account holders either pay an additional fee for members who have moved out of the household or those sharing accounts become full subscribers.”

The analysts expect the higher subscriber count will have a minimal impact on first-quarter revenue but alleviate concerns that Netflix’s password-sharing crackdown was having a detrimental effect on subscriber results.

“NFLX estimates 100mn potential subs, including 30mn in UCAN, are lost because of password sharing. We view this headwind as an enormous long-term opportunity, with sizable upside realized in 2023/2024,” they added. “Given the strong level of engagement on NFLX’s service, we believe they are particularly well-positioned to convert a significant percentage of these lost subs.”