On Apr 3, 2013, Zacks Investment Research upgraded
Netflix (NFLX) to a Zacks Rank #1 (Strong Buy). With a strong
return of 79.0% year-to-date and a positive estimate revision
trend, Netflix is an attractive investment opportunity.
Why the Upgrade?
Upbeat fourth-quarter results, substantial increase in paid
subscriber base and continued international expansion contributed
to the upgrade.
Netflix reported fourth-quarter results on Jan 23, 2013.
Earnings of 13 cents per share were significantly ahead of the
Zacks Consensus Estimate of a loss of 12 cents per share. This was
the fourth consecutive quarter of positive earnings surprise with
an average beat of 10.4%.
The better-than-expected earnings were primarily driven by
robust subscriber additions in Netflix's streaming business (both
domestic and international). Netflix's paid streaming subscriber
base (both domestic and international) increased 8.76 million from
the year-ago quarter and 2.87 million in the previous quarter to
Based on the strong results, Netflix provided an optimistic
guidance for the first quarter of 2013. Netflix forecasts earnings
to be between 0 to 23 cents per share. Total subscriber base in the
domestic streaming market and in the international streaming market
is expected in the range of 28.5 million to 29.2 million and 6.6
million to 7.3 million, respectively.
The Zacks Consensus Estimate for fiscal 2013 increased 28.0% to
$1.19 per share, as most of the estimates were revised higher over
the last 60 days. For fiscal 2014, the Zacks Consensus Estimate
increased 21.0% to $2.71 per share.
The long-term expected earnings growth rate for Netflix is
Other Stocks to Consider:
Investors can also consider other Internet service providers
that are doing well right now. These include Yahoo! Inc.
(YHOO) , Priceline.com (PCLN) and Comcast (CMCSK) . While Yahoo! and Comcast carry a Zacks Rank #1
(Strong Buy), Priceline carries a Zacks Rank #2 (Buy).COMCAST CLA SPL (CMCSK): Free Stock Analysis
ReportNETFLIX INC (NFLX): Free Stock Analysis ReportPRICELINE.COM (PCLN): Free Stock Analysis
ReportYAHOO! INC (YHOO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment