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Netflix Price Target Boosted to Wall Street High at Goldman

Netflix’s second-quarter results will come in “well above guidance” when the streaming major reports next week, Goldman Sachs analysts said, raising their price target on the shares to a Wall Street high $670.

The investment firm affirmed its buy rating on the Los Gatos, Calif., company. At last check Netflix shares were 3.1% higher at $523.49.

Goldman raised its price target from $540 on expectations that Netflix will report that it added at least a net 12.5 million subscribers in the quarter, as quarterly app downloads reached a record.

“While management is likely to guide the third quarter conservatively given the first-half outperformance and the massive uncertainty in the current environment, we believe consensus estimates for the second half and beyond remain too low,” Goldman analyst Heath Terry wrote.

Accelerating subscriptions in the Europe-Middle East-Africa region as well as the Asian-Pacific region will help Netflix to a strong quarter.

Consensus estimates are for 8.2 million subscribers added. Goldman raised its own guidance from its previous 8.5 million estimate.

For the year Goldman expects Netflix to report paid subscriber net additions of 45.6 million vs. the FactSet consensus estimate of 35.8 million.

Goldman says that the consensus estimate “continues to underestimate the size of Netflix’s global addressable market, the impact of incremental content spending, Netflix’s growing value to both distributors and content creators, the weakening competitive landscape, and the acceleration of the global adoption curve.”

Netflix is scheduled to report second-quarter results on July 16 after the closing bell. Analysts surveyed by FactSet expect GAAP earnings of $1.82 a share on revenue of $6.09 billion.