Here's what every major Wall Street analyst is predicting for Netflix earnings after the bell

Published Tue, Jan 21 202011:32 AM ESTUpdated Tue, Jan 21 202012:37 PM EST

Wall Street analysts have plenty of questions for Netflix when it reports fourth-quarter earnings after the bell on Tuesday. It's the first of the so-called FAANG stocks — which includes Facebook , Amazon , Apple and Google — to do so. Shares of Netflix have climbed more than 17% since the company's previous earnings report in October, despite an onslaught of streaming competition from the likes of Disney+ and the upcoming launch of NBCUniversal's Peacock. Analysts will also be looking for updates on many other key issues surrounding the streaming giant, including content spending and subscriber, international and revenue growth. Despite all that, expectations remain high. Here's what else analysts are watching for with Netflix earnings: "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 analyst Heath Terry said. The firm also expects to see Netflix add more subscribers than it anticipated due to the company's robust content. "We expect 9.7mn total paid net subscriber additions, ahead of guidance, driven by what we view as the company's strongest content slate to date," he said. Bank of America offered a similar analysis. "More competition is coming in 2020, but we see opportunity for subscriber upside, moving past peak cash flow losses, operating margin improvement, and potential for new subscriber models in developing markets as key positive stock drivers in 2020," analyst Nat Schindler said. While the firm said 2019 saw a lot of "uncertainty" surrounding the company, it urged investors to stick with the stock. "On a longer-term basis, we continue to believe Netflix will see significant leverage on its global content investment, which should support a premium valuation," he said. One firm said it's expecting more of the same from Netflix and not necessarily in a positive way. "We expect meaningful content losses to trigger domestic subscriber losses for the next several years," Wedbush analyst Michael Pachter said. "Thus, we expect the status quo to be largely maintained until the end of 2021." Goldman Sachs- Buy rating "The content additions to the platform, in particular what we believe was Netflix's highest quality Original release slate to date, drove this outperformance, despite the lingering impact of last year's price increases and high profile competitive launches, and should continue to do so as these cash content investments pay off. 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." Bank of America- Buy rating "More competition is coming in 2020, but we see opportunity for subscriber upside, moving past peak cash flow losses, operating margin improvement, and potential for new subscriber models in developing markets as key positive stock drivers in 2020. On a longer-term basis, we continue to believe Netflix will see significant leverage on its global content investment, which should support a premium valuation." Credit Suisse- Outperform rating "But, we do see a modest beat, helped by film success: We see evidence that two of mgmt's guidance assumptions might be overly conservative, their caution on potential film slate benefits and an assumed impact from competition due to the Disney+ launch. Several 4Q films were quite successful as evidenced by households watched (El Camino 25.7m and The Irishman 26.4m in their first week alone) or by making Netflix's list of top 10 most watched titles of 2019 (Six Underground, and to a lesser extent Klaus). .. For competition, our analysis of app downloads shows no discernible impact from the launch of Disney+, despite Disney+ getting off to an extraordinary start its first 7 weeks." Needham- Underperform rating "We recommend caution going into NFLX earnings report after the market close today owing to: a) Disney+ sub adds; b) NFLX's premium pricing; c) debt raises valuation risks; d) share price overhang; and e) Comcast's Peacock implies a deteriorating competitive environment in 2020. Press estimates have new Disney+ sub adds at about 20mm in the US in 4Q19, and we expect some cannibalization of NFLX's 60mm US subs in 4Q19 plus weak US sub adds guidance for 1Q20. US subs are about 3x more profitable than offshore subs plus NFLX's international growth is now coming from $3/month mobile only subs and it takes 4 of these subs to offset revenue lost from a single US sub." UBS- Buy rating "With the competitive dynamic still front & center with investors and a year of volatile subscriber reporting behind us, we still see a compelling risk/reward on a 12-month view in NFLX shares. Heading into this specific earnings report, we find no compelling edge from UBS Evidence Lab data and the stock has had a 16% recovery from Q4 '19 lows. Against that backdrop, we root ourselves in the long-term fundamentals and NFLX screens very well there -consistent/compounding revenue growth ahead (with an investor fear about pricing power overdone in our view), continued expanding EBIT margin trajectory, recent disclosure pointing to potential long subscriber growth runways in EMEA & Asia-Pac and a company approaching FCF breakeven in the coming years." Rosenblatt- Neutral rating "We expect revenue growth to slow substantially in '20E with less of a contribution from both volume and rate. In the US, we are in-line with guidance although see downside risk as shares are up 15% since Disney+ launched with greater scale than we anticipated potentially offsetting benefits from the breakout TV series The Witcher. Internationally we are also in-line with 4Q guidance with a difficult comparison in Latam offsetting modest growth in EMEA and APAC." Wedbush- Underperform rating "We expect content spending to trigger substantial cash burn for many years; in spite of four Netflix price increases in the last five years, cash burn continues to grow. ... We expect meaningful content losses to trigger domestic subscriber losses for the next several years. ... Our UNDERPERFORM rating does not imply the imminent demise of the service; rather, we expect the migration of third-party content to be relatively slow, and it remains unclear whether Netflix can replace it with quantity and quality sufficient to keep its current subscriber base loyal. We think it is likely that Netflix will pay whatever it takes to attract high quality content, and believe its competitors will be slow to gain scale. Thus, we expect the status quo to be largely maintained until the end of 2021." Morgan Stanley - Overweight rating "Netflix 4Q US guidance attempted to capture its estimate for Disney Plus related churn, so we remain in-line with guidance for 4Q. In addition, we have attempted to bake in some modest pressure in EMEA in 2Q19 and LATAM in 4Q19. We continue to forecast a YoY improvement in net additions in the US in '20, although international growth remains the key driver of the business and we remain at over 22mm paid net adds internationally in '20." Nomura Instinet- Neutral rating "This is the first official release post the Disney+ launch (launched November 2019) and early third-party indications suggest there has been a muted impact from the initial rush of subscriptions. Outside of the competitive environment, we believe investors are focused on the newly disclosed international breakout detail, which indicated LATAM is farther along than we originally assumed (by almost double), while APAC is under-penetrated relative to our expectations pripr to the disclosure." Cowen- Outperform rating "We expect a solid qtr, with NFLX's Original programming hours (+3% y/y with 802 hrs., a record) in 4Q serving as a tailwind; we also think Dis+ related incremental US sub churn will be manageable relative to guide. Our US survey suggests NFLX retains lead in the living room, particularly among younger demos." J.P. Morgan- Overweight rating "Despite NFLX's recent strong performance, we believe investor sentiment remains quite mixed, as reflected in our 2020 Investor Survey where NFLX was the least favored FANG stock. ... Importantly, 4Q serves as NFLX's first chance to climb the wall of worry & show strong growth alongside DIS+, while also providing a clearer path to profitability w/its initial 2020 FCF guide. We also believe the narrative starts to shift from NFLX vs. DIS+ to more streaming options accelerating the shift away from linear TV, which ultimately benefits NFLX." KeyBanc- Sector Weight rating "We see the near-term risk/reward on NFLX as slightly positive, as we expect 4Q results to exceed current estimates with an outlook for 1Q20 subscribers, 2020 margins, and free cash flow that should support current expectations. We maintain a positive view of the Company's longer-term potential, and would like to see greater evidence of stability in investment efficiency or strong elasticity around lower-priced plans to become more positive on the shares." BMO- Outperform rating "We have pointed to 4Q19 (the first post Apple TV+ and Disney+ launches) as key to our thesis: it has finally arrived. This Q will provide a first look at domestic trends in the face of the aforementioned competition, as well as initial 2021 FCF guidance, and we believe there could be upside to consensus views for both. We continue to believe the "streaming wars" narrative is false and there will be multiple winners in global streaming, and thus, continue to recommend buying NFLX, AMZN, and DIS together." SunTrust- Buy rating "We expect NFLX to remain the global leader in internet TV with a durable subscription DTC model that is difficult to disrupt. The company is generating more incremental revenue dollars than competitors, and reinvesting more of those dollars back into content, to in-turn generate more subscribers and revenue to keep the flywheel spinning. Management is also committed to steadily 1) increasing operating margin and 2) improving FCF, with the content working capital deficit to stabilize as the mix shift toward self-produced originals (versus licensed originals and non-originals) hits steady-state." Raymond James- Strong Buy rating "Netflix's improving content library is resonating with consumers globally, creating a network business with unprecedented scale. We see > 20% revenue growth and 35%+ operating margin achievable over the medium term due to 1) share gains against linear video; 2) pricing power; and 3) moderation of growth investment." Evercore ISI- In Line rating "With Disney+ and Apple TV+ launching during the fourth quarter, and ahead of the HBO Max and 'Peacock' next year, the impact of competition on Netflix trends is likely to remain a focus for the next several months. We continue to think that while these new services could have some impact on subscriber trends for Netflix, the trajectory of Netflix ARPU could face more meaningful headwinds given that some new products (particularly Disney+ and Apple TV+) are pricing far-below Netflix at launch. Further, we remain cautious on the implications of increased competition for content costs – we estimate that content amortization across major general entertainment SVOD platforms could grow from ~$15B last year to ~$35B by 2021 and such an acceleration in content acquisition is likely to drive meaningful cost inflation for new and acquired titles." Disclosure: Peacock is the streaming service of NBCUniversal, parent company of CNBC.

Reed Hastings, Netflix

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Wall Street analysts have plenty of questions for Netflix when it reports fourth-quarter earnings after the bell on Tuesday.

It's the first of the so-called FAANG stocks — which includes Facebook, Amazon, Apple and Google — to do so.

Shares of Netflix have climbed more than 17% since the company's previous earnings report in October, despite an onslaught of streaming competition from the likes of Disney+ and the upcoming launch of NBCUniversal's Peacock.

Analysts will also be looking for updates on many other key issues surrounding the streaming giant, including content spending and subscriber, international and revenue growth.

Despite all that, expectations remain high.

Here's what else analysts are watching for with Netflix earnings: