Netflix Stock Extends Rally Ahead of Earnings

Netflix stock has extended its remarkable coronavirus-era run , as the Street continues to ratchet up expectations for the streaming video service’s first-quarter earnings report next week.

On Tuesday, Imperial Capital analyst David Miller repeated his Outperform rating on Netflix stock (ticker: NFLX), while lifting his price target to $447, from $438. On Monday, the stock touched the $400 level for the first time in almost two years, and pushed over that level in early trading Tuesday.

Miller expects the company to post 7.3 million subscriber net adds for the first quarter when it reports results on April 21, with 7 million of those coming from international ex-Canada. His estimate is 300,000 ahead of the company’s own guidance of 7 million—which was issued before a huge share of the global population became subject to stay-at-home orders in the face of the Covid-19 pandemic.

Miller expects revenue of $5.74 billion and profits of $1.70 a share, slightly above the company’s pre-virus guidance of $5.73 billion and $1.66 a share. Street consensus is for revenue of $5.74 billion and per-share earnings of $1.64.

It’s worth noting 24 of the 40 analysts who follow Netflix rate the stock as Buy or Strong Buy, against just two Sell or Underperform ratings. But the average target price on the stock is $370, more than $30 below the current share price—that would suggest a flurry of price target revisions are in the cards once the numbers are issued next week. (Or maybe sooner.)

Raymond James analyst Justin Patterson pointed out in a note late Monday that there are positive signs for Netflix both in search and app download data. Patterson says internet searches for the term “Netflix” were up 64% world-wide and 39% in the U.S. in March from a year ago. Netflix also ranks as a top-five entertainment app in the number of downloads in 145 countries, with 14% year over year growth, Patterson says, citing app tracking firm App Annie. “Given the size of Netflix’s subscriber base, these trends are very impressive,” he writes.

Meanwhile, Roku (ROKU) late Monday said that streaming hours on its platform rose 49% in the first quarter from a year ago, the latest sign that consumers have fully embraced streaming video in the current crisis.

Netflix shares on Tuesday rose 1.9%, to $404.21. Roku shares jumped about 8% to $104.24.