(This story is for CNBC PRO subscribers only.) Wall Street analysts say Netflix is still the stay-at-home stock to own in these uncertain times after the company reported its first quarter earnings on Tuesday after the bell. The streaming giant blew past analyst expectations reporting nearly 16 million new subscriber additions . Netflix acknowledged, however, that the coronavirus pandemic likely contributed to the huge number and warned that, that may not continue after the crisis passes. In addition, the company beat on revenue but was slightly behind on earnings per share. The hot stock had been up 35% this year heading into the earnings report as the wave of stay-at-home consumers flocked to the streaming service. Shares of the company are down 4% in early trading. Here's what else analysts are saying about Netflix earnings: ""Overall, NFLX's 1Q results & 2Q guide exceeded even the highest expectations, with NFLX proving it is a clear beneficiary of stay-at-home," JPMorgan analyst Doug Anmuth said. The firm said that it was obvious that consumers had made the move to home viewing. "While mgmt's more cautious 2H guide & debate around the magnitude of pull-forward is holding shares flat in after-hours trading, what is clear in our view is that the secular shift towards on-demand streaming is accelerating, resulting in a bigger business over time," they said. Netflix reported exactly what was expected of them RBC added. ""In terms of the stock, much was priced in, and much was delivered." The firm also said it still sees upside in the stock and its thesis hadn't changed. "NFLX is one of the few companies to see greater demand/adoption during the COVID Crisis, though its fundamentals were clearly strengthening prior to that. Our Long Thesis is very much intact, and we have increased conviction in our long-term estimates," RBC said. Wells Fargo still wasn't quite ready to go all-in on the company but admitted the report was pretty strong and upgraded the stock to equal weight from underweight. "We don't see investors selling NFLX to go risk-on elsewhere," Wells Fargo said. Citi- Neutral rating "Netflix delivered 1Q20 revenue slightly above Citi and the Street's expectations. More importantly, net adds came in significantly higher than Citi and the Street. And, 2Q20 net add guidance is also well above the Street's current forecasts. However, management acknowledged some uncertainty regarding its 2Q20 net add forecast. Moreover, management noted that a strong dollar may temper the financial impact of better-than-expected subscriber growth. All told, we suspect Netflix's strong net add performance may outweigh measured forward commentary and would expect the shares to respond positively." Barclays- Overweight rating "While a beat was clearly expected given the degree of NFLX's recent outperformance vs broader markets, the scale of the beat was likely much bigger than the most bullish expectations. Management acknowledged that some of this growth is likely a pull forward from future quarters. In addition, the second half has tough content comps vs last year. At the same time, the company also highlighted that its 2020 content slate was more or less fully produced. Consequently, Netflix could be one of the only services in the legacy or streaming ecosystem with a large volume of originals in the second half given present production shutdowns. This should continue to help both churn and gross adds. Therefore, we would expect the pull forward effect to be small relative to the scale of the beat." Goldman Sachs- Buy rating, price target to $540 from $490 "While management suggested this outperformance was a function of subscribers being pulled forward and that net adds in the second half would be down vs. the prior year, we believe this is likely to prove overly conservative given the network effect of additional subscribers, growth in lower cost mobile only plans, and a signiﬁcantly easier competitive environment. Looking beyond the current crisis, we continue to believe that Netﬂix's massive content investments , global distribution ecosystem and the growing scale and technological advantage the platform offers creators looking to maximize the value of content will drive ﬁnancial results signiﬁcantly above consensus expectations." Bank of America- Buy rating, price target to $525 from $460 "We see Netflix well positioned to sustain subscriber growth strength with '20's content slate in-hand, budget to buy other studios' stranded content, and reduced N-T competition. ... We continue to see the acceleration in Netflix subscriber penetration on the social/economic changes spurred by COVID-19 as a permanent benefit. We expect the benefits to growth may last longer than expected and that Netflix will look even more dominant exiting the crisis." Wells Fargo- Upgraded to equal weight from underweight "Guidance implies H1 net adds of 23mm vs ~28mm for all of 2019. Management notes that some of this could be simply pull-forward from the longer organic profile. Regardless, it demonstrates the unique value of Netflix in these even more unique times. As long as hand sanitizer is sold out, NFLX should outperform, and execution is outstanding. ... Few businesses are growing right now, but NFLX is growing subs at a break-neck pace. Rotation risk will increase when a recovery starts to take shape, but as evidenced in our recent DIS downgrade we're not optimistic that normal economic life is right ahead with test & trace + vaccines still an imponderable ways off. We don't see investors selling NFLX to go risk-on elsewhere." UBS- Buy rating, price target to $535 from $400 "Against a backdrop of the 'new normal' w/ global 'shelter in place' and increased HH streaming media consumption, NFLX provided a blowout Q1 global net add performance & guided Q2 sub adds to 7.5m. While mgmt commentary does paint a picture of forward sub volatility (seasonality & post "shelter in place") in 2H, we think the bigger thematic narrative is that NFLX is one of the best positioned companies for the LT secular theme of in-home/mobile digital media consumption." JPMorgan- Overweight rating, price target to $535 from $480 "Overall, NFLX's 1Q results & 2Q guide exceeded even the highest expectations, with NFLX proving it is a clear beneficiary of stay-at-home. While mgmt's more cautious 2H guide & debate around the magnitude of pull-forward is holding shares flat in after-hours trading, what is clear in our view is that the secular shift towards on-demand streaming is accelerating, resulting in a bigger business over time." RBC- Outperform rating, price target to $500 from $420 "In terms of the stock, much was priced in, and much was delivered. In our Large Cap Previews report we had labeled NFLX one of the former, and the Q1 results and Q2 outlook support that conclusion. We believe that NFLX is highly likely to accelerate Sub Adds in 2020 – we believe 30MM+ will be added across the four regions – while Global ARPU is likely to modestly grow, Operating Margins are likely to advance 300 bps to 16%, and FCF burn should materially decline. NFLX is one of the few companies to see greater demand/adoption during the COVID Crisis, though its fundamentals were clearly strengthening prior to that. Our Long Thesis is very much intact, and we have increased conviction in our long-term estimates." Raymond James- Downgraded to outperform from strong buy "Netflix is off to a phenomenal start in 2020E, on pace for ~23M paid net adds in 1H20E. Shares now trade at ~6.9x 2021E EV/S, which is not demanding for 20%+ revenue growth, but not inexpensive. Further, there is incremental risk around F/X, timing of price increases, and retention. These factors cause us to lower 2021E revenue and EPS by 1% and 7%, respectively. While we continue to view NFLX as a long-term winner in DTC video, we believe potential for positive estimate revisions and multiple expansion are limited until we observe post-COVID-19 retention rates." Stifel- Downgraded to hold from buy "Netflix subscriber trends have benefited meaningfully as a result of the current environment. As government restrictions ease, we expect some degree of trend reversal to emerge as the conditions that drove the surge in demand begin to subside. There is limited visibility to 2H numbers given the unknown timing of a potential return to normalcy and the degree that recent subscriber growth has been pulled forward. We see a more balanced risk/reward profile at current valuation levels, with Netflix shares trading at 8.1x and 6.7x EV/revenue on our 2020 and 2021 estimates, respectively. We continue to see NFLX as a long-term beneficiary of media and entertainment disruption and would revisit our view in the high $300s."
Netflix CEO Reed Hastings gives a keynote address, January 6, 2016 at the CES 2016 Consumer Electronics Show in Las Vegas, Nevada.
Robyn Beck | AFP | Getty Images
(This story is for CNBC PRO subscribers only.)
Wall Street analysts say Netflix is still the stay-at-home stock to own in these uncertain times after the company reported its first quarter earnings on Tuesday after the bell. The streaming giant blew past analyst expectations reporting nearly 16 million new subscriber additions.