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OFFON

COMCAST CORPORATION

(CMCSA)
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Comcast : Netflix growth plan tops Wall St watchlist as lockdown love fades

07/21/2021 | 02:53am EDT
FILE PHOTO: Small toy figures are seen in front of diplayed Netflix logo

(Reuters) - Netflix Inc's plans to revive its slowing subscriber growth will be in focus when it reports second-quarter results on Tuesday, as lockdown binge-watching subsides and competition from Disney+ and HBO Max ramps up.

Netflix has forecast it would add just 1 million subscribers globally in the second quarter, a tenth of what it added a year ago when COVID-19 restrictions forced people to seek entertainment at home.

The streaming pioneer has also been losing market share to new services such as Disney+, Apple's Apple TV+, WarnerMedia's HBO Max and Comcast's Peacock. To be sure, the industry's overall subscriber growth has also slowed as the U.S. market saturates.


Netflix demand drops as competition peaks

THE CONTEXT

Some Wall Street analysts have said a first-mover advantage will only take it so far and that Netflix needs to produce new content, renew content licenses and explore other revenue sources such as live sports and advertising to turbo-charge growth.

Co-CEO Reed Hastings has long been opposed to adopting an advertising model saying it would have to compete with market leaders Google, Facebook and Amazon.

The company is exploring an e-commerce push to sell content-related merchandise and recently hired Facebook executive Mike Verdu to anchor its gaming expansion.

But analysts are skeptical about the gaming move.

"While this strategy could be marginally accretive to Netflix's member and revenue growth, we doubt the platform would be meaningfully competitive with endemic gaming platforms or content publishers anytime soon," said Matthew Thornton, analyst at Truist Securities.

For now, Netflix is under intense pressure to produce new content, after big hits like "Emily in Paris", "Bridgerton", "The Queen's Gambit" and "The Crown" in 2020. The pandemic delayed production, but the company has announced new seasons of "Stranger Things" and "Ozark" among others coming next year.


Fewer new signups for Netflix as restrictions ease

FUNDAMENTALS

* Analysts estimate Netflix's second-quarter revenue to grow 19% to $7.32 billion. Revenue in North America, its biggest region by revenue, is set to increase by 13.4%.

* Earnings per share is estimated at $3.16

* Its shares have lost 1.5% year-to-date, while the benchmark S&P 500 index has gained 13.4%.

* The stock, which soared 67% in 2020, is also the weakest performer among FAANG stocks this year.


FAANG stocks versus S&P 500 FAANG stocks versus S&P 500

WALL STREET SENTIMENT

* Wall Street analysts are largely bullish, with 36 out of 46 rating the stock "buy" or higher, while six have a "hold" rating and four rate it as a "sell" or lower.

* The median price target is $620 versus the current price of $532.30

QUARTER REFINITIV ACTUAL RESULT SURPRISE %

ENDING IBES ESTIMATE

Mar. 2.97 3.75 Beat 26.4

31 2021

Dec. 1.39 1.19 Missed -14.2

31 2020

Sep. 2.14 1.74 Missed -18.8

30 2020

Jun. 1.81 1.59 Missed -12.2

30 2020

Mar. 1.65 1.57 Missed -4.9

31 2020

Dec. 0.53 1.30 Beat 146.8

31 2019

Sep. 1.04 1.47 Beat 41

30 2019

Jun. 0.56 0.60 Beat 6.6

30 2019

(Reporting by Nivedita Balu and Eva Mathews in Bengaluru; Editing by Sweta Singh, Anshuman Daga and Saumyadeb Chakrabarty)

By Nivedita Balu and Eva Mathews


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
COMCAST CORPORATION 1.24% 58.83 Delayed Quote.12.27%
NETFLIX, INC. 0.65% 517.57 Delayed Quote.-4.28%
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Financials (USD)
Sales 2021 115 B - -
Net income 2021 13 214 M - -
Net Debt 2021 88 375 M - -
P/E ratio 2021 20,8x
Yield 2021 1,68%
Capitalization 270 B 270 B -
EV / Sales 2021 3,12x
EV / Sales 2022 2,88x
Nbr of Employees 168 000
Free-Float 83,3%
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Technical analysis trends COMCAST CORPORATION
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Income Statement Evolution
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Mean consensus BUY
Number of Analysts 37
Last Close Price 58,83 $
Average target price 66,62 $
Spread / Average Target 13,2%
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Managers and Directors
Brian L. Roberts Chairman, President & Chief Executive Officer
Michael J. Cavanagh Chief Financial Officer
Jeff Votaw Vice President-Engineering
Candy Lawson Chief Compliance Officer & Senior Vice President
Karen Dougherty Buchholz Executive Vice President-Administration
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