Netflix
Netflix Inc. (NASDAQ: NFLX) posted its 52-week high 11 months ago. Since then, the stock price has dropped by nearly 64%. The biggest losses came after Netflix reported quarterly results in April.
Last week, the streaming media giant announced it will launch its U.S. advertising-supported tier in November, a move that has some observers cheering and others more reticent. The change could snare more subscribers because of the lower price, or it could cannibalize current subscribers who want to pay less for a service they use less often. From Netflix’s point of view, the ad-supported tier gets some help from its partnership with Microsoft and, if the new offer is a success, could remove the market’s focus on subscriber growth as the sole metric of the company’s business.
Of 42 analysts covering the stock, 15 have a Buy or Strong Buy rating while another 22 rate the shares at Hold (these totals are virtually identical to those at the end of the prior quarter). At a share price of around $230.00, the upside potential based on a median price target of $245.00 is 6.5%. At the high price target of $399.00, the upside potential is about 73.5%.
Third-quarter revenue is forecast at $7.84 billion, down 1.6% sequentially but 7.8% higher year over year. Adjusted EPS are forecast at $2.17, down 32.3% sequentially and up 32% year over year. For the full 2022 fiscal year, analysts expect to see EPS of $10.31, down 8.3%, on sales of $31.66 billion, up 6.6%.
Netflix shares trade at 22.3 times expected 2022 EPS, 21 times estimated 2023 earnings of $10.96 and 17 times estimated 2024 earnings of $13.53 per share. The stock’s 52-week range is $162.71 to $700.99. Netflix does not pay a dividend. Total shareholder return for the past 12 months was negative 63.7%.
United Airlines
Over the past 12 months, shares of United Airlines Holdings Inc. (NASDAQ: UAL) have fallen by about 26%. As bad as that is, it is better than the industrywide index that is down by more than 40%. Higher wage costs and fuel prices have been partially offset by fewer flights and higher prices, but that is only a formula for staying alive in extraordinarily tough times. What United does have is a strong presence in the international air travel market. That may have helped with the third quarter, but winter may not be the best time to bank on international travel.
Analysts continue to be cautious about United stock. Of 20 brokerages covering the firm, eight have Hold ratings and nine rate the shares at Buy or Strong Buy. At a share price of around $35.50, the upside potential based on a median price target of $47.00 is 32.4%. At the high price target of $81.00, the upside potential rises to 128%.
The consensus third-quarter revenue forecast calls for sales of $12.74 billion, up about 5.2% sequentially and by about 64.4% year over year. Analysts are forecasting adjusted EPS of $2.28 per share, up nearly 60% sequentially and better than the $1.02 per share loss in the year-ago quarter. For the full 2022 fiscal year, analysts expect EPS of $0.43, much improved over last year’s $13.94 per share loss. Revenue is forecast to rise by 79.5% to $44.21 billion.
United stock trades at 6.8 times expected 2022 EPS, 4.3 times estimated 2023 earnings of $8.19 and 3.2 times estimated 2024 earnings of $11.22 per share. The stock’s 52-week range is $30.54 to $54.52, and the company does not pay a dividend. Total shareholder return for the past 12 months was negative 26%.
Originally posted at 24/7 Wall St.
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