Netflix's Robust Second Half Lineup Cheered by Analysts

(Bloomberg) -- Netflix search trends on Google appear to show a strong start to the second half of 2019, according to analysts writing ahead of its second-quarter earnings scheduled for July 17.

Analysts covering the online-streaming provider expect content to be second-half loaded this year in order to compete with the launch of Disney+ in November. Piper Jaffray sees the year-over-year domestic subscriber growth index at 11.8% versus Netflix’s own guidance of 8.2%, with international growth stronger as well. Piper believes investors expect a largely in-line second-quarter report with the potential for third-quarter guidance to be above consensus due to the strong content slate.

Read more: Netflix Bulls Tout ’Stranger Things’ Record Start and 2Q Setup

Here’s what analysts are saying:

Piper Jaffray (Michael Olson)

It’s "reasonable to expect guidance slightly above estimates," with third-quarter consensus estimates for international subscriber adds of 5.55 million and domestic of 928,000.

Those estimates seem conservative, with the strong content slate of Murder Mystery in late second-quarter plus Stranger Things 3 , Orange is the New Black 7 and Glow 3.

Maintains overweight and $440 price target

Loop Capital (Alan Gould)

"The launch of Stranger Things season 3 appears to be a strong start to the second half content cycle for Netflix."

"We like the stock dynamic into the report and believe that recent underperformance relative to peers sets the stage for second-half outperformance"

"Launched July 4th, season 3 of Stranger Things is arguably the most important original series return for NFLX this year"; early reviews on Rotten Tomatoes show scores of 89% from critics and 88% from the audience.

"While NFLX shares have a history of significant downside volatility around subscriber misses, we would worry less about a miss in these circumstances, think downside would be limited and a sell-off would likely be bought."

Maintains buy and $425 price target

Rosenblatt Securities (Mark Zgutowicz)

"With rising competition for scripted originals and key licensed content like The Office and Friends leaving the service soon, NFLX is increasingly pivoting towards comedies specials, documentaries to drive its share in viewing hours and fend off incoming competition."

Netflix has been successful with original content driving gross adds to subscribers of video on demand, Zgutowicz writes and adds "binge watching drives the need to create even more content"

Facing "rising competition domestically we believe a beat would have to occur internationally, likely driven by a continued focus on local content".

Raise price target to $370 from $350 and maintains neutral

To contact the reporter on this story: Gregory Calderone in New York at gcalderone7@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper

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