Streaming giant Netflix Inc (NASDAQ:NFLX) gets sized up by an analyst ahead of second-quarter (Q2) earnings, which are set for July 18.
The Netflix Analyst: JPMorgan analyst Doug Anmuth has an Overweight rating and raises the price target from $650 to $750.
The Analyst Takeaways: Expectations for Netflix are high heading into Q2 financial results. Trends are pointing to optimism ahead of the print, Anmuth said.
There is potential upside to revenue, operating income and free cash flow guidance, Anmuth said.
"We remain positive on Netflix shares heading into 2Q earnings on Thursday, 7/18, while also recognizing high expectations," he added.
Anmuth recognizes that Netflix shares are up 34% year-to-date. Shares are also trading within 6% of the all-time highs hit back in November 2021.
The analyst sees positive trends of paid sharing growth, core subscriber growth, strong content and the ad-supported tier growth.
"Paid sharing has become a more normal course of business, but still remains impactful."
Along with a strong lineup of shows and movies in the second quarter and beyond, the analyst points to upcoming sports content from Netflix including a boxing match between Jake Paul and Mike Tyson, Christmas Day NFL games, a hot dog eating contest with Joey Chestnut and more.
Anmuth said the sports content "should boost engagement across NFLX's large global subscriber base & attract more ad dollars."
"While Netflix's current focus is sports entertainment & should content, we expect a bigger push into live sports over time, particularly as leverage continues to shift in NFLX's direction."
Read Also: Netflix 'Positively Positioned For Operating Momentum': Analyst Sees 'Normalization Of Streaming Wars'
Data from Sensor Tower suggests that download and daily active user trends were up in Q2, the analyst added.
Anmuth forecasts Netflix to add five million to six million net subscriber adds in the second quarter. This is in-line with Netflix's expectation of lower than 9.3 million reported in the first quarter.
"We believe NFLX's large scale, strong engagement, & diversified content will push NFLX toward becoming the default choice for how users consumer TV, film, & other long-form content."
NFLX Price Action: Netflix shares trade at $653.34 versus a 52-week trading range of $344.73 to $697.49. Netflix stock is up 48% over the last year.
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