Evercore ISI sees mixed setup into Q3 print for Netflix

In a research note ahead of Netflix’s quarterly results, Evercore ISI says it sees a mixed setup into Q3 print. On the plus side, medium-term Operating Margin expectations have been reset since management’s commentary at an investor conference in early September, Evercore says. Further, the firm sees a touch greater upside to Street’s Q3 Net Adds estimates of 5.8M and views buyside “bogey” of 6M-7M as reasonable, given typical seasonality, easing “Cancel Rage” from Paid Sharing, and its survey suggesting Paid Sharing drives a greater skew towards gross adds. On the negative side, what looks to be a much more prolonged actors’ strike raises the uncertainty of Q4/Q1 content slate if, and as, shows potentially get pushed out, and total viewing hours remain in double digits year-over-year decline into October, Evercore adds. The firm has an Outperform rating on the shares with a price target of $500.