Some Wall Street analysts are raising the alarm on Netflix ahead of the streaming company’s second-quarter earnings after the bell Wednesday. NFLX YTD mountain Netflix shares since the start of 2023 “We’re raising #s into the print for NFLX, but also note very high buyside expectations,” wrote Wells Fargo analyst Steven Cahall. “We actually think investors would buy a pullback on the [long-term] outlook in the event NFLX has [short-term] pressure on the print (de ja vue).” Jefferies analyst Andrew Uerkwitz is also bracing for a pullback, viewing any dip on the back of earnings as a buying opportunity. So far this year, shares have surged about 62%. Underpinning this expectation is the belief that subscription estimates are too high. Jefferies forecasts just 2 million additions, while investors anticipate more than 4 million. Cahall upped second-quarter estimates to 2.1 million from 1.5 million, but said that investors would likely view anything below 3 million as a “miss.” “Our checks indicate it’s a tough bar to reach – while we do think Netflix can clear it, we remind investors that the past 8 months has seen expectations for faster adoption of AVOD and password sharing crackdown / conversion drive shares ahead of fundamental progress; both instances led to a pullback,” wrote Uerkwitz. Despite these near-term concerns, analysts say Netflix’s long-term thesis remains intact. These investors will likely be unbothered by the outcome given the company’s future revenue growth and advertising opportunities, he said. Uerkwitz lifted his price target to $520 from $440, reflecting about 10% upside from Tuesday’s close. Early Netflix password crackdown data boosts his confidence in the company’s short-term path, he added. — CNBC’s Michael Bloom contributed reporting
