Analysts seem ‘chill’ heading into Netflix’s Q4

Market Updates

Joe Biden’s presidential inauguration may be overshadowed by a string of high-profile corporate earnings releases this week.

US earnings season kicks off with a bang

The latest US earnings season kicked off with a bang last week, with a handful of America’s big banks reporting their latest quarterly results.

The market response? JP Morgan’s share price fell 1.79%, Citigroup plunged almost 7% and Wells Fargo crashed 7.80%. Bank stocks have indeed fallen out of favour in recent times – as banks book billions in loan loss provisions in response to COVID-19 and ultra-low interest rates weigh on margins.

US earnings season is set to continue this week – potentially overshadowing Joe Biden’s inauguration as President, on 20 January. While this event is unlikely to cause much shock to financial markets, investors should nonetheless monitor futures markets leading up to the inauguration.

Beyond that, some of the key corporate earnings this week include:

  • Tuesday: Netflix, Bank of America, and Goldman Sachs
  • Wednesday: Procter & Gamble, and United Health
  • Thursday: Costco, Intel, and IBM

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Wall Street remains infatuated with Netflix

Netflix is one of the highest profile companies set to release its fourth quarter results this week. The coronavirus pandemic has shined a new light on the streaming company, with the stock rising 46% over the last year.

Despite that run, a $220 billion market cap and an 80x earnings multiple, the stock remains overwhelmingly liked by Wall Street – assigning Netflix an Overweight rating on average and an average price target of $566.82 per share, according to MarketWatch.

In fact, despite Netflix facing firm selling pressure in the last month – falling 6.55% in that period – analysts seem ‘chill’ about the company’s upcoming Q4. In January alone, Cowen, UBS and Citigroup all raised their price targets on the stock.

Looking at the company’s own expectations, Netflix has guided for fourth quarter revenues of $6,572 million, an operating margin of 13.5% and net income of $615 million.

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