Netflix posts a $5 million quarterly loss -- its first since 2005 -- even as the company's subscriber base grows to 26 million and CEO Hastings' pay jumps 68 percent to $9.3 million for 2011.
Wall Street analysts on Thursday lowered their price targets on Netflix’s stock after the streaming video giant’s third-quarter earnings report that included some disappointments, while news that HBO would launch a stand-alone online service next year didn’t play a big role in their reports.
Cowen analyst John Blackledge wrote on Thursday: “Netflix reported solid third-quarter financials, but U.S. and international sub growth was lower than expected. Fourth-quarter sub guidance was also light (versus our forecast and consensus), driving shares down about 25 percent after hours.”
His reaction: “We trimmed estimates and raised cash content costs given ramping originals.” While he maintained his “market perform” rating on Netflix’s stock, he cut his price target to $360 from $446.
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Credit Suisse analyst Stephen Ju also brought down his price target, from $430 to $394, but maintained his “neutral” rating, saying that Netflix, led by CEO Reed Hastings, was “paying the costs for the march across Europe” following recent launches in six new markets.
While Netflix management provided a lot of information that Wall Street digested overnight, Ju wrote: “The net result is a slower-than-expected path to profitability in its new international cohorts and hence a longer investment horizon for Netflix bulls, rather than an outright change to the investment thesis.”
Stifel, Nicolaus analyst Benjamin Mogil similarly wrote: “We are lowering our target price on Netflix to $425, although maintaining our “buy” rating, following disappointing third-quarter subscriber trends and weak fourth-quarter subscriber guidance.” He suggested that sub de-acceleration was at the forefront of Wall Street discussion, but may turn out to be a more temporary challenge.
BMO Capital Markets analyst Edward Williams also maintained his “outperform” rating on the stock. “We are lowering our price target to $375 (from $400), reflecting tempered subscriber and earnings expectations, along with lower target multiples in the current market environment,” he said.
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Among other Wall Street changes, Piper Jaffray analyst Michael Olson cut his Netflix price target to $345, and Citigroup reduced its to $365.
Netflix’s stock continued to trend lower in pre-market activity. Just after 8 a.m. ET, it was down 26 percent at $332.81.
Email: Georg.Szalai@THR.com
Twitter: @georgszalai
