Netflix slips as Wall Street weighs in on mixed Q1 results
Marvin Samuel Tolentino Pineda/iStock Editorial via Getty Images
Netflix (NASDAQ:NFLX) shares gave up almost 3% in early trading on Wednesday after the streaming giant reported a mixed first-quarter and offered tepid guidance, leading to a varied reaction from Wall Street.
UBS analyst John Hodulik, who upgraded Netflix (NFLX) to buy from neutral after the results, said the company is likely to see "sustained double-digit profit growth" and a sharp increase in free cash flow, as the competition focuses more on profits, potentially helping Netflix (NFLX).
Hodulik said with that scenario in mind, Netflix (NFLX) could see gains in its subscribers and pricing power in the coming years, "while also keeping a lid on content costs". Those costs are also expected to be one of the biggest "swing factors" affecting Netflix's (NFLX) earnings and free cash flow in the years ahead.
Additionally, Hodulik said that new revenue-driving initiatives - including paid sharing and the advertising-supported tier - show the company's "performance is inflecting," as revenue and margins are both poised to expand, while content spending stays "relatively stable."
Hodulik also said he expects Netflix (NFLX) to see a subscriber boost in the second-half of the year to more than 12M, due in part to paid-sharing and the lower priced ad tier.
On the other hand, Goldman Sachs analyst Eric Sheridan reiterated his sell rating on Netflix (NFLX) after the results, noting that while paid-sharing and the ad tier could help bring in more subscribers and boost margins over the long-term, the stock is expensive at current levels. 
Hodulik said with Netflix's (NFLX) stock price up by 39% in the last 6 months, compared to a 12% gain for the S&P 500 (SP500), "we see a lot of the forward operating momentum already priced into Netflix shares."
Citi analyst Jason Bazinet, who has a buy rating and price target of $400 a share on Netflix (NFLX), said the weak guidance is likely to impact the stock in the near term. 
"we would not be surprised to see shares trade a tad lower," Bazinet wrote in a research note.
Other streaming and media stocks fell in sympathy, including FuboTV (FUBO), Roku (ROKU) and Walt Disney (DIS).
On the earnings call, Netflix (NFLX) said its password sharing initiative was set to go global and that it would increase the pace of its stock buybacks over the year.
Analysts are largely cautious on Netflix (NFLX). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates NFLX a HOLD.