Goldman raises Netflix price target, predicts subscriber growth will top the Street next week

Published Tue, Jan 14 20208:27 AM ESTUpdated Tue, Jan 14 20209:41 AM EST

Goldman Sachs raised its price target on Netflix to $450 per share from $400 per share, anticipating strong results this year. Goldman's new price target implies more than 32% upside for the streaming company, which closed at $338.92 per share on Monday. Thanks to Netflix's highly anticipated movies and shows in the fourth quarter, Goldman is expecting the streaming platform to report 9.7 million paid subscriber additions in the fourth quarter, well above guidance of 7.6 million. "While the stock has outperformed the broader market since 3Q results as investor expectations have largely converged toward company guidance, we continue to believe Netﬂix will exceed that guidance and consensus expectations for the year ahead, driving more share price outperformance," Goldman Sachs senior equity analyst Heath Terry said in a note to clients on Tuesday. Shares of Netflix have soared nearly 20% since reporting third quarter earnings in October of 2019, about double the return of the S & P 500 is the same period of time. Terry said Netflix's strong content and "highest quality Original release slate to date" drove the share outperformance. This rally was all despite the lingering impact of last year's price increases and high profile competitive launches, like AppleTV+ and Disney+, Terry added. On Monday, Netflix nabbed 24 Academy Award nominations , more than any other media company in the industry this year. This accolade demonstrates Netflix's spending on movies like "The Irishman," Marriage Story" and "Two Popes" is paying off. The firm is forecasting earnings per share of 50 cents on revenue of $5.388 billion next week. In the fourth quarter last year, Netflix reported 30 cents per share on revenue of $4.19 billion. Wall Street consensus estimate for next week's earnings is 52 cents per share on revenue of $5.449 billion. Goldman's earnings estimates for the full year 2020 are earnings of $6.34 per share on revenue of $25.64 billion, compared to consensus of $5.48 per share on revenue of $24.539 billion. The firm expects Netflix to add 34.3 million paid subscribers in 2020, compared to Wall Street's estimates of 27 million. Goldman Sachs has a buy rating on Netflix. — with reporting from CNBC's Michael Bloom.

In this photo illustration the Netflix logo is seen displayed on a smartphone.

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Goldman Sachs raised its price target on Netflix to $450 per share from $400 per share, anticipating strong results this year.

Goldman's new price target implies more than 32% upside for the streaming company, which closed at $338.92 per share on Monday.

Thanks to Netflix's highly anticipated movies and shows in the fourth quarter, Goldman is expecting the streaming platform to report 9.7 million paid subscriber additions in the fourth quarter, well above guidance of 7.6 million.

"While the stock has outperformed the broader market since 3Q results as investor expectations have largely converged toward company guidance, we continue to believe Netﬂix will exceed that guidance and consensus expectations for the year ahead, driving more share price outperformance," Goldman Sachs senior equity analyst Heath Terry said in a note to clients on Tuesday.

Shares of Netflix have soared nearly 20% since reporting third quarter earnings in October of 2019, about double the return of the S&P 500 is the same period of time. Terry said Netflix's strong content and "highest quality Original release slate to date" drove the share outperformance. This rally was all despite the lingering impact of last year's price increases and high profile competitive launches, like AppleTV+ and Disney+, Terry added.