September 16, 2011, 1:22 PM ET
Netflix: Piper Cuts Estimates A Second Day In A Row
blogs.barrons.com
By Tiernan Ray Piper Jaffray’s Mike Olson today reiterates an Overweight rating on shares of Netflix ( NFLX), while cutting estimates for a second day in a row following yesterday’s announcement by the company that subscribers will be fewer this quarter than previously thought as a result of price changes.
Olson cut his price target to $300 from $305, after yesterday cutting the price from $330.
Olson sees subscriber churn in Q4 now at 5.2%, higher than the 4.8% he estimated yesterday. He maintains the 6% churn for Q3 that he offered up yesterday. It will take time for churn to go back down, he asserts: Churn will probably stay at 4.6% in all of 2012, versus last year’s 3.8%. That’s higher than the 4.5% rate he calculated for 2012 in yesterday’s report.
Olson cut this year’s revenue estimate to $3.25 billion from $3.27 billion, and cut EPS by two cents to $4.54. For 2012, he cut his numbers to $4.25 billion in revenue and $6.68 in EPS from a prior $4.38 billion and $6.79 per share.
“In the last 3 months Netflix has gone from a solid momentum story, to a company with question marks surrounding it,” writes Olson, adding that “damage has been done to investor confidence.”
Although he believes the company’s lead in “subscription Internet video” will hold, he expects the stock to suffer for some time as the Street waits to see how bad churn will be.
In related news, my friend Eric Savitz has an interesting post today at Forbes about how Cablevision’s ( CVC) COO Tom Rutledge said yesterday he’d “love” to sell Netflix streaming as a service to the company’s cable subscribers.
Netflix shares today are down $11.34, or 6.7%, at $158.00.
Previously: Netflix: Caris Cuts To Average; Less ‘Surety’, September 16th, 2011. |
