Shareholders might have noticed that Netflix, Inc. (NASDAQ:NFLX) filed its quarterly result this time last week. The early response was not positive, with shares down 8.6% to US$485 in the past week. Revenues were in line with forecasts, at US$6.4b, although statutory earnings per share came in 18% below what the analysts expected, at US$1.74 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
See our latest analysis for Netflix
Following the latest results, Netflix’s 39 analysts are now forecasting revenues of US$29.4b in 2021. This would be a sizeable 23% improvement in sales compared to the last 12 months. Per-share earnings are expected to shoot up 40% to US$8.94. Before this earnings report, the analysts had been forecasting revenues of US$29.2b and earnings per share (EPS) of US$8.81 in 2021. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
The analysts reconfirmed their price target of US$542, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic Netflix analyst has a price target of US$700 per share, while the most pessimistic values it at US$200. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. Next year brings more of the same, according to the analysts, with revenue forecast to grow 23%, in line with its 26% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 15% per year. So although Netflix is expected to maintain its revenue growth rate, it’s definitely expected to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there’s been no major change in the business’ prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations – and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$542, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on Netflix. Long-term earnings power is much more important than next year’s profits. We have estimates – from multiple Netflix analysts – going out to 2024, and you can see them free on our platform here.
We don’t want to rain on the parade too much, but we did also find 1 warning sign for Netflix that you need to be mindful of.
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