Netflix Stock Gets Price-Target Cut As Subscriber Outlook Lowered

A Wall Street analyst on Wednesday said Netflix (NFLX) subscriber additions in the fourth quarter are likely to disappoint, so he lowered his price target on Netflix stock.

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SunTrust Robinson Humphrey analyst Matthew Thornton slashed his price target on Netflix stock to 355 from 410, though he kept his buy rating. Shares of the internet television network dropped 3.2%, and were near 259.05, in morning trading on the stock market today.

Thornton said his firm’s subscriber data were “tracking a little light” through November. The data pointed to fourth-quarter subscriber additions poised to end up below Wall Street forecasts.

High-profile new content in December, such as “Bird Box,” “Black Mirror: Bandersnatch” and “Taylor Swift Reputation Stadium Tour,” should help close the gap, he said. “But meaningful Q4 upside looks unlikely,” Thornton said in a report to clients.

SunTrust’s current data points to fourth-quarter U.S. subscriber adds of 1.43 million to 1.75 million, vs. estimates for 1.75 million. The firm’s data also indicates international subscriber additions of 5 million to 6.9 million, vs. analyst predictions for 7.3 million.

Netflix Content Slate Strengthening

Thornton expects Netflix’s new content slate to strengthen around midyear with season three of “Stranger Things” and other shows. New content coming in the first quarter includes fresh seasons of “Marvel’s The Punisher” and “A Series of Unfortunate Events.”

News reports indicate that Netflix is hiring former Activision Blizzard (ATVI) Chief Financial Officer Spencer Neumann. He would replace Netflix’s departing Chief Financial Officer David Wells.

“We would view the hire favorably, as Neumann has public CFO experience at a large global consumer tech/entertainment company, with leverage on the balance sheet and subscription revenue, and is fairly well-known and liked by investors,” Thornton said.

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