Netflix data tracking ahead of schedule in Q1, J.P. Morgan says in bullish update
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A bullish update on Netflix (NFLX
+1.7%) from J.P. Morgan finds the streaming leader tracking ahead of plan in early numbers for the first quarter - good news for a "controversial" stock, the firm says.
Halfway through the current quarter, the firm's analysis of Apptopia data says Netflix is ahead of schedule and if it keeps up, will reach 5 million net subscriber adds, ahead of management guidance for 2.5 million.
Average global growth in daily active users has decelerated about 40 basis points year-over-year (to about 11%), but the DAUs are still improving on an absolute basis, analyst Doug Anmuth notes.
The data suggest that average global download growth of the app has sped up to an 8% year-over-year gain, vs. 4% in the fourth quarter, with Asia Pacific still Netflix's fastest growing geography (regional DAUs up 26%, and downloads up 22%); India price cuts could support that growth by driving demand at lower price points, the firm says.
"We continue to believe strong secular growth remains in global streaming as NFLX accounts for less than 10% of TV time in the US â its biggest market â and NFLXâs penetration of global broadband households ex-China is less than 30%," it says.
First-quarter content has also looked stronger than expected, with Korean series All of Us are Dead now the company's third-biggest non-English series ever.
Still, there's potential subscriber impact from the company's latest price increase in the U.S./Canada, J.P. Morgan says, and it likely factored into the light guidance for 2.5 million net adds.
It's projecting compound annual growth in revenues in the low mid-teens, and about 20% for GAAP EPS, from 2021-2026.
And it's keeping Netflix as a top pick, with a price target of $605 implying 54% upside.
Recently in content news, Netflix is teaming up with videogame maker Take-Two on a movie based on the BioShock game franchise.