Analysts expect a strong quarter from Netflix bolstered by subscriber growth

  • Netflix revenue for Q3 2017 is expected to be $2.97 billion, according to a Thompson Reuters consensus estimate.
  • EPS is projected at 32 cents, per a Thomson Reuters.
  • The strong growth is based on continued subscription additions, despite price increases.

Analysts are expecting a robust earnings report from Netflix, including healthy subscriber growth.

  • Revenue: $2.97 billion, according to a Thomson Reuters consensus estimate
  • EPS: 32 cents, per a Thomson Reuters consensus estimate

Netflix is scheduled to report its latest quarterly earnings shortly after the bell on Monday. It is expected to post revenue of $2.97 billion, according to a Thomson Reuters consensus estimate, up 30 percent year over year. Earnings per share are approximated at 32 cents, a growth rate of 166 percent over this time last year.

Shares in the company topped $200 for the first time Friday. Netflix raised some of its prices earlier this month, including for its high-definition plan and 4K streaming plan. Despite the price increase, analysts believe subscribers will stick with the company and are bullish on its international growth.

"I think the company has shown a higher ceiling towards continued subscriber growth in the U.S.," Frost Investment Advisors analyst AB Mendez told CNBC, adding that he didn't think the price hike would "move the needle" in terms of subscription adds this late in the quarter.

"If they were to announce a weaker subscriber guidance (for next quarter), the subscription prices will probably be a blip on the radar," he added.

Goldman Sachs on Friday reiterated its buy rating on Netflix, saying in a report that it expectedthe company to post higher-than-expected subscriber numbers. JPMorgan also increased its 12-month price target on Friday based on higher subscription prices and Netflix's deal to include its service for free with T-Mobile, which will also increase subscriber growth.

"We think there will only be modest negative impact on churn and overall gross adds given the price increase is happening around a very strong content and favorable seasonal period," JPMorgan analyst Doug Anmuth wrote in a note to investors.

Disney's plan to remove its movies from Netflix starting in 2019 in order to begin its own streaming service will probably have more impact on the company.

However, Netflix plans to temper the loss of content with its own productions. Netflix's chief content officer, Ted Sarandos, told Variety the company plans to spend $7 billion on content next year, up from $6 billion in 2017. It also completed its first acquisition — comic book company Millarworld — in August.

Frost's Mendez pointed out Netflix boasts a 93 percent show renewal rate, compared with traditional linear networks 70 percent. It shows the company does know what consumers want, which will allow it to increase rates and retain customers, he said.

"They're demonstrating the algorithm (to create content using data) they have put forth to investors is working," Mendez said.