Netflix, Inc. (NASDAQ:NFLX) Reaccelerates Net Sub Additions

The Netflix company logo is seen at Netflix headquarters in Los Gatos, CA on Wednesday, April 13, 2011. AFP PHOTO / Ryan Anson

After the release of 2Q2015 results of Netflix, Inc. (NASDAQ:NFLX), the analysts covering the company’s stock circulated updated research to investors. The analysts at Bank of America Merrill Lynch stated that despite the second quarter being company’s seasonally weakest quarter, Netflix reaccelerated net sub additions year-on-year.

It was due to the strong line-up of content releases in the quarter including Grace and Frankie, Sense8, Daredevil and others. The analyst firm reiterated ‘buy’ rating on Netflix stock and raise price target to $121 from $103 per share based on sum-of-parts valuation.

The financial numbers

Shares of Netflix surged more than 18% to close at $115.81in last trading session after the streaming video specialist firm’s second quarter earnings surpassed expectations. Quarterly revenue surged 22.7% YOY to $1.65 billion, which resulted in net income of $26.3 million, and that’s after adjusting the company’s recent 7-for-1 stock split.

Netflix, Inc. (NASDAQ:NFLX) has remained a favorite stock of investors throughout the year, as company’s shares almost doubled since the start of this year. The company not only surpassed the revenue expectations but also excelled on other important metrics like the number of subscribers. The number of subscribers surged to 65.6 million in 2Q2015, with many analysts attributing the growth to the popularity of new series “House of Cards” and “Orange is the New Black.” Outside the U.S. market, the subscribers jumped to 23.3 million internationally compared to the analyst forecast of 22.87 million.

The analysts’ view

Ankesh Agarwala and Tim Nollen of Macquarie said that Netflix contribution margins came above expectations. The firm now has a target price of $113 per share on company’s stock. Thomas Yeh and Benjamin Swinburne of Morgan Stanley said that the 2Q2015 results and 3Q2015 guidance continues to reflect increasing demand for Netflix’s product. The research firm increased the price target on NFLX to $125 from previous price target of $107.50.

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