Pacific Crest’s Andy Hargreaves this afternoon reiterates a Sector Perform rating on shares of Netflix (NFLX) while raising his 2012 and 2013 earnings per share estimates on what the prospect of a more profitable international roll-out than he’d prevoiusly expected.
Canada is set to generate a profit for Netflix’s streaming operations in 2013, Hargreaves opines, while Latin America, the U.K. and Ireland are not likely to be profitable until 2014.
But the costs for those markets turn out to be slightly less than he had feared, although the revenue may be slightly lower than he’d thought.
After rolling up estimates for each international market, Hargreaves now sees revenue of $3.61 billion next year and profit of 25 cents, as compared to a prior forecast for $3.63 billion and only 21 cents per share. For 2013, he now sees revenue of $4.26 billion and profit of $3.55 per share versus a prior view of $4.3 billion and $2.78 per share.
Despite confidence that Netflix has several “key competitive advantages” and “a very compelling service,” Hargreaves wants to see subscribers return to the service before he recommends the stock: “If we gain increased confidence that the company has returned to sustainable subscriber growth and can drive meaningful long-term margin expansion, we would likely upgrade our rating on the shares.”
Netflix shares are up $1.22, or 1.8%, at $70.64.
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