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

Published Tue, Apr 21 202011:58 AM EDT

(This story is for CNBC PRO subscribers only.) Netflix is one of the few stocks performing well this year, rising 35% in 2020. Wall Street analysts expect that momentum to continue when the company reports its fiscal first quarter earnings on Tuesday after the bell. The streaming giant has become the ultimate stay-at-home stock as the coronavirus pandemic causes turmoil in all parts of the market. In fact, the crisis may have advanced the shift towards more on-demand streaming, which benefits a company like Netflix, analysts say. However, investors will still be watching for key metrics, including revenue, pricing, competition, and subscriber growth. Here's what else analysts are watching for with Netflix earnings: "Against a backdrop of global sheltering in place to address COVID-19, NFLX's position as the streaming video leader should be on display in its upcoming Q1'20 EPS report," UBS analyst Eric Sheridan said. The firm also said its most recent checks actually showed clients weren't too concerned about competitors or whether the company raises prices. "In our investor conversations, we no longer encounter the debates about competition for subscribers and pricing power as the 'new normal' of sheltering in place has clearly shifted consumer behavior toward the value proposition of in-home digital streamed media content," they said. Netflix may be coming into its own and just at the right time, according to Bank of America. "We see Netflix benefiting from a near-perfect 1H setup with strong content, stay-at-home orders, suspended sports leagues and shuttered movie theatres seeing consumers globally turn to the streaming TV service," the analyst said. In addition, the firm believes the company is well-positioned long after the coronavirus passes. "We anticipate the step-up will result in a permanent increase in penetration for Netflix's subscriber model and see its low price-point and staple nature supporting healthy fundamentals performance in a recession, even after stay-home orders are lifted." Another analyst was taking a more cautious approach. "The timing of COVID-19-related usage and sign-ups late in the quarter, combined with an existing high degree of penetration for Netflix's domestic addressable market, suggests relatively tempered upside in our view," Wedbush's Michael Pachter said. The firm has an underperform rating on the stock. But even Wells Fargo with its underweight rating on the stock, said that subscriber numbers could be strong. "Given these dynamics, and the viral nature of Tiger King, it seems a solid setup, in our view," the analyst said referencing Netflix's latest hit show. Here's how analysts are rating Netflix: JPMorgan, Outperform rating "Recent data points have been strong in a COVID-19 environment: 1) According to Apptopia, the Netflix app was downloaded ~21M times in 1Q, the second highest quarter ever just behind 1Q19, which saw 9.6M net adds; 2) ROKU's 1Q results showed +49% Y/Y growth in total streaming hours; 3) We view Disney+ passing 50M global subs as positive for NFLX as it reflects the secular shift to online streaming; and 4) A WSJ survey published on 4/11 found the average American household increased spending on video streaming from $30 in November to $37 in March, making it increasingly clear that on-demand is not a zero-sum game." UBS, Buy rating "Against a backdrop of global sheltering in place to address COVID-19, NFLX's position as the streaming video leader should be on display in its upcoming Q1'20 EPS report. In our investor conversations, we no longer encounter the debates about competition for subscribers and pricing power as the "new normal" of sheltering in place has clearly shifted consumer behavior toward the value proposition of in-home digital streamed media content. The lingering investor debate for 2020 remains how summer seasonality of sub adds/losses might manifest once sheltering in place is lifted and how postponed production efforts might result in a content "air pocket" later this year." Goldman Sachs, Buy rating "We expect Netﬂix to report 1Q results well above guidance, with over 10mn net subscriber additions, and provide initial guidance for 2Q ahead of FactSet Consensus, even accounting for management conservatism. Content additions to the platform, combined with the value of Netﬂix's library to those staying home during the COVID-19 crisis, drove this outperformance, more than offsetting the lingering impact of last year's price increase and growing competition in SVOD. " RBC, Outperform rating "We have been consistently positive on NFLX over the last eight years based on a very large secular growth opportunity, NFLX's leading position in Streaming proven profitability in the US, consistently strong content line-up with global appeal, and what we believe to be sustainable pricing power. With its high-value/low-cost value proposition, subscription-based revenue, and high customer satisfaction/retention rate, we believe Netflix should also be one of the few 'safe havens' in today's turbulent environment." Bank of America, Buy rating "We see Netflix benefiting from a near-perfect 1H setup with strong content, stay-at-home orders, suspended sports leagues and shuttered movie theatres seeing consumers globally turn to the streaming TV service. We anticipate the step-up will result in a permanent increase in penetration for Netflix's subscriber model and see its low price-point and staple nature supporting healthy fundamentals performance in a recession, even after stay-home orders are lifted." Credit Suisse, Outperform rating "Stay-at-home is extending Netflix's lead as most competitors are not global. Also, 1Q20 strength and streaming outstripping pay TV usage increases should bolster confidence in TAM (video inevitably shifting to streaming). Cross-currents beyond the 1Q pull-forward vs. strong 2Q content slate include easy churn comps vs. the unknown impact of global spikes in unemployment." Stifel, Buy rating "As we have previously written, we view the current environment as likely to drive incremental usage and subscriber additions and help drive down near-term churn for Netflix as school closures and interruptions to daily business activity and events force consumers to seek alternatives to traditional forms of entertainment (and potentially accelerate the demise of secularly challenged industries). In our view, the current environment may also pull forward adoption curves in markets where Netflix is currently underpenetrated, which would result in a benefit to Netflix with a duration beyond 1H:20, in our view." Wedbush, Underperform rating "We expect content spending to trigger substantial cash burn for many years. Content migration to competing services and price hikes may slow subscriber growth and consistently negative FCF makes DCF valuation speculative. ...The timing of COVID-19-related usage and sign-ups late in the quarter, combined with an existing high degree of penetration for Netflix's domestic addressable market, suggests relatively tempered upside in our view." Morgan Stanley, Overweight rating "Assuming the credit markets remain open to Netflix as they are today (bonds trading above par), the 2020 global advertising recession likely cements Netflix's leadership position and increases the returns it can generate. Netflix competes for consumers' time, and its primary competition for that time - incumbent broadcasters around the world - face 10-20% advertising revenue declines and will likely need to reduce content investment. From 2015 through 2019, Netflix took advantage of a bull market and ran a cumulative FCF deficit of over $10bn to build its lead. The bull market has ended, but it ends with Netflix's lead intact and perhaps insurmountable." Raymond James, Strong buy rating "NFLX has been the biggest winner from shelter-in-place, and strength in the U.S.and APAC could drive paid net adds past 9M in 1Q20. ...NFLX is at all time highs and investors expect a strong print. When we first published our view of NFLX as a quarantine beneficiary in late February, we were met with skepticism about liquidity and competitive positioning. Today, NFLX is near all time highs as the Street is beginning to contemplate more upside to consensus net adds." Atlantic Equities, Overweight rating "Netflix could announce 2m Q1 US and Canada (UCAN) subscriber adds when it reports earnings on Tuesday after the close. This would be the highest level of UCAN adds since Q119 and could propel total company Q1 adds well above guidance of 7.0m given we had assumed just 66k UCAN adds this quarter. This also supports recent estimates of 9.0m plus global adds for the quarter." Benchmark, Sell rating "Even heading into likely strong 1Q20 results, with informal expectations as high as 10M global member additions from aberrant Shelter in Place mandates, we believe that NFLX's stock price fully recognizes its global streaming leadership and the pop culture appeal of transient hits like 'Tiger King.' Our cautious view is based on our belief that the shares already reflect a 'lazy long' halo from the perception of a COVID-19 safe haven. Despite high customer additions and lower churn, we are concerned with mounting streaming competition, potentially restricted pricing power from a global economic downturn and surveys suggesting that streaming services are among the first household budget items to be cut with job losses." Canaccord, Buy rating "At a time when some competitors may be working through production delays for shows that are instrumental to their recent and upcoming launches, Netflix's vast library of original and licensed content sets it apart from competition. The recent stock performance is pricing in a healthy subscriber trajectory over the near-term, and we think that Netflix will see a boost to new subscriber additions along with a reduction of churn, resulting in upside to Q1 and a strong Q2 outlook, while longer-term COVID-19 should be a tailwind in the transition from legacy cable bundles to SVOD platforms." Baird, Outperform rating "Expect NFLX upside. Per our survey published March 23, we expect strong Q1 results from NFLX. We forecast 7.0 million global net additions, though checks could suggest 8-9 million+. We expect COVID-19 to drive an accelerating shift to OTT content near and long term." Wells Fargo, Underweight rating "With the wind at its back we think the bull case bogey for the Q1 print is > 10mm net adds, and the Q2 guide bogey is > 5mm. This would imply H1 sub growth ~+30% y/y, which is about what the stock is up YTD (vs S & P500 -12%). And, many investors think Q1 could smash this expectation given the coronavirus impact, and if that's the case management has little incentive to guide too aggressively for Q2. In other words, if Q1 is well ahead the stock can work on a softer Q2 guide since the H1 net add number would still be so solid. Given these dynamics, and the viral nature of Tiger King, it seems a solid setup, in our view." Loop, Buy rating "We believe NFLX added 10-11M new subscribers during 1Q, well ahead of 7M guidance. We think widespread sheltering boosted gross activations and reduced churn, while a boom in streaming consumption made password sharing less viable. The shut-down of non-essential business also shut down production, which we think will make NFLX close to free cash flow positive without impairing its competitive lead. Margins and profits should also be higher as lower content spend leads to lower content amortization." BMO, Outperform rating "No change to sub estimates, which were updated on 3/31 ; they remain slightly above a rising consensus. In this note, we tweak cash content spend and raise 2020 FCF to reflect lower costs as live productions are halted. 2021 FCF declines slightly as we assume rolling production resumptions begin in 2H20 and costs drift into 2021. But 2022-2030 FCF rises as we believe accelerating changes to the ecosystem will help rationalize content spending sooner (winners win earlier)." Pivotal, Buy rating "We raised our Netflix global subscriber forecasts materially on likely higher gross subscribers and lower subscriber churn boosted by global consumer "stay at home" orders around COVID-19, which combined with an increase in our terminal year target EBITDA multiple (from 18 to 20X) led to a $65 increase in our YE'20 target price to a Street high $490. We believe the unfortunate COVID-19 situation is cementing NFLX's global DTC dominance partly driven by the incremental content spend that is enabled by their massive and growing subscriber base." SunTrust, Buy rating "7 points: 1) Maintain Buy. 2) Our search/app/other data models each point to 1Q paid adds > 9.5m (consensus 7.5m). 3) We continue to expect upside to 2Q paid adds 4) Search interest lead vs Disney+ has widened during CV. 5) EV/sales vs market is now slightly above 5-yr avg. 6) We expect NFLX to be able to raise $1b-$2b in debt this year. 7) Headwind could arise later in the year if consumer behavior normalizes post CV while the slate is light (per production delays) and the consensus hurdle is higher."

Netflix CEO Reed Hastings speaks during Netflix Slate Event 2018 at JW Marriot on October 9, 2018 in Bogota, Colombia.

Gabriel Aponte | Getty Images

(This story is for CNBC PRO subscribers only.)

Netflix is one of the few stocks performing well this year, rising 35% in 2020. Wall Street analysts expect that momentum to continue when the company reports its fiscal first quarter earnings on Tuesday after the bell.

The streaming giant has become the ultimate stay-at-home stock as the coronavirus pandemic causes turmoil in all parts of the market. In fact, the crisis may have advanced the shift towards more on-demand streaming, which benefits a company like Netflix, analysts say.

However, investors will still be watching for key metrics, including revenue, pricing, competition, and subscriber growth.

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