Netflix Inc. shares are taking a pounding today after the company failed to meet the lofty expectations of investors when it released first-quarter results late Monday.
While the quarter generally beat Street estimates, the company's outlook spooked shareholders accustomed to ultra-bullish outlooks and a steady parade of good news that has nearly tripled the company's stock price over the past year.
Netflix said it now expects second-quarter earnings per share of between 93 cents (U.S.) and $1.15, below the average analyst forecast of $1.19.
But Canaccord Genuity analyst Heath Terry isn't deterred. He notes that while the guidance might have been light on the bottom line due to higher costs, the company's revenue and subscriber growth forecasts were actually better than expectations. "We continue to believe that Netflix is in the sweet spot between declining physical competition and rising digital competition," Mr. Terry said. He raised his 2011 and 2012 earnings and revenue forecasts.
Upside: Mr. Terry raised his target price by $50 to $300 and reiterated his "buy" rating. His new target is 35 times estimated 2012 pro forma earnings per share. While that may sound like a sky-high valuation, he notes it is only a modest premium to the broader e-commerce group's 33 times.
Savanna Energy Services Corp. has acquired Performance Services, a private well servicing company, in a share transaction valued at $35-million. "We believe the acquisition enhances Savanna's well servicing platform, provides operational synergies and adds high-quality assets and qualified personnel," commented CIBC World Markets Inc. analyst Jeff Fetterly.
Upside: Mr. Fetterly raised his price target by 50 cents to $11.50.
Newmont Mining Corp. reported solid first-quarter earnings, as costs came in at the low end of company guidance, noted RBC Dominion Securities Inc. analyst Stephen Walker. But production is expected to remain flat and costs are likely to increase throughout the remainder of this year due to Newmont's portfolio of large open-pit mines with high leverage to fuel costs and wage pressures, he said.
Upside: Mr. Walker raised his price target by $5 (U.S.) to $67 and maintained an "underperform" rating.
Second Wave Petroleum Inc. said its first Beaverhill Lake horizontal well in Judy Creek, Alta., tested at 1,825 barrels of oil equivalent a day, which RBC Dominion Securities Inc. analyst Michael Harvey termed "a very positive initial test result." He believes the next series of Beaverhill Lake results may become significant catalysts for the stock.
Upside: Mr. Harvey hiked his target price by $1 to $3.50.
Detour Gold Corp. could become an attractive takeover candidate as the company is fairly well shielded from the cost pressures facing others in the industry, said Wellington West Capital Markets Inc. analyst Steve Parsons. The company is redeveloping the Detour Lake gold mine in Ontario, holding what is believed to be the largest undeveloped gold reserve in Canada. Senior producers are likely to examine "the relative merits of acquiring ounces in lieu of developing their own greenfield projects that are substantially exposed to both capex creep and execution risk," he said.
Upside: Mr. Parsons reiterated his "buy" rating and $48.60 target price.
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