Is Netflix on the cusp of another quarterly outperformance?
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Is Netflix on the cusp of another quarterly outperformance?

Streaming video on demand (SVOD) market leader Netflix has been riding high this year. The company posted yet another set of sterling results earlier this year, and its share price has appreciated by almost 105% so far this year (remember – we’re only in July!), making it the second-best performer in the S&P 500. According to analysts at Baird, we might be in for more good news later this month, when the company reveals its latest quarterly earnings.

Netflix’s share price has soared over the first seven months of the year

graph 0407 netflix

SOURCE: Yahoo Finance

Baird Equity Research has raised its price target for Netflix by $90, citing a consumer survey that suggests the company is about to announce another quarter of incredible subscriber growth. Analyst William Power said, in a note to clients:

"Our quarterly U.S. subscriber survey suggests solid Q2 growth, seemingly confirming Street expectations. Our international checks also suggest another strong quarter. Survey results and Google trend analysis suggest solid results, and given the long runway and increasing focus on local content, we expect continued solid results.”

Baird polled 3,000 U.S. consumers to make its forecast, which suggests that Netflix added 1.2 million domestic subscribers and 5 million international subscribers. The driving force behind this influx of new viewers is simple: original content.

Netflix, more than any other player in the space (Amazon Video, Hulu, and others) has embarked on an ambitious quest to generate exclusive, premium content that keeps audiences coming back for more. The strategy has been an unqualified success, and includes shows like Stranger Things and Orange is the New Black, as well as movies like the Natalie Portman vehicle Annihilation.

With Netflix scheduled to release its latest quarterly earnings on July 16th, there’s only two weeks left before we find out whether Baird’s survey is on the money. As usual, you’ll find a full report right here.

Disclosure

Dominion holds Netflix in its Global Trends Ecommerce Fund.


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