Netflix shares soared in premarket trade Wednesday as Wall Street gushed about its third-quarter earnings beat.
The stock was seen trading 11 percent higher in the premarket to a price of $385.53 at around 4:40 a.m. ET.
The U.S. streaming giant on Tuesday revealed that it had picked up 6.96 million subscribers in the third quarter of the year, against analyst expectations of a more than 5 million increase in users. The company is seeing massive growth beyond its home market, according to the numbers. Out of the 6.96 million additional users it reported, 5.87 million of those came from overseas.
Netflix's third-quarter revenues came in line with expectations, at $4 billion, while earnings per share (EPS) beat estimates, at 89 cents versus the 68 cents forecast by analysts.
Multiple analysts revised their stock price target for Netflix, with Goldman Sachs being among the most bullish, lifting its target to $480 from $430. Here's a rundown of some other price target hikes:
- Morgan Stanley raised its target price to $475 from $450.
- J.P. Morgan raised its target price to $450 from $415.
- Raymond James raised its target price to $435 from $400.
- Canaccord Genuity raised its target price to $470 from $450.
Both Goldman Sachs and Raymond James cut their price targets for Netflix on Tuesday, ahead of the company's financial results.
Morgan Stanley's Benjamin Swinburne and other analysts at the broker noted Netflix's success in international markets, paying particular attention to performance in Europe. Although it also noted that the firm is seeing incremental growth in Asia as well.
"Geographically, we believe continental Europe is accelerating in growth including markets like France and Germany," the analysts said in a research note. "New local original fare in India is also helping Asia begin to inflect, although it remains early days."
One broker detracted from the bullish sentiment on Wednesday, however, with KeyBanc cutting it to a "sector weight" from "overweight," saying it didn't see improving investment efficiency or significant ancillary opportunities over the next year. It added that long-term opportunities for Netflix to build revenue could take "several years to develop."
Traditional media firms — plus companies from other industries — are racing to rival the likes of Netflix and other streaming services with their own digital platforms. Last week alone, AT&T's WarnerMedia, Viacom, Walmart, Costco and Apple were reported to be launching online video services.
Meanwhile, consolidation is seen as another means for the large media companies to catch up with their new media rivals. There have been deals in the industry including AT&T's hotly contested $85 billion deal to buy Time Warner, Disney's $71 billion takeover of the majority of Fox and Comcast's acquisition of Sky.
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