Santosh Rao, Head of research, Manhattan Venture Research joins BNN for a look at what to expect out of Netflix earnings. He also explains why he thinks that the company is being faced with significant headwinds.
Inside the Market's roundup of some of today's key analyst actions
Online entertainment provider Netflix Inc. (NFLX-Q) had disappointing second-quarter results, resulting in "less conviction" for RBC Dominion Securities' "outperform" rating.
Subscriptions were "missed across the board" and "Netflix is citing significant publicity around its ungrandfathering price increase as a major factor," said RBC analyst Mark Mahaney. He said the rating remains unchanged because "NFLX will cycle through negative issues (price increase, Olympics distraction) and then benefit from medium-term positive factors (Comcast partnership, content expansion such as Disney and more original content)." He also noted the company's "very robust international growth path."
The price target falls to $130 (U.S.) from $140. The consensus for the stock is $116.47, according to Thomson Reuters.
Credit Suisse raised its price target for Netflix to $122 (U.S.) from $119, saying "demand for Netflix's services remains robust." Analyst Stephen Ju's rating for the stock remains unchanged at "neutral."
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Credit Suisse analyst Kevin Choquette cut his price target and affirmed his "underperform" rating on Great-West Lifeco, citing foreign exchange and Brexit risks.
"Its large European segment exposes it to economic challenges in the region, including a relatively high proportion of fixed-income investments in European financial services companies," he said.
Target: He lowered his target price to $36 from $39. The consensus is $36.30.
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Agriculture company Ag Growth International Inc. (AFN-T) "continues to execute on its proven strategy for growing domestically and internationally" says AltaCorp Capital analyst Peter Prattas. The company recently acquired Mitchell Mill Systems, and Mr. Prattas says the deal "adds both product and geographic breadth," and is "consistent with Ag Growth's longstanding and proven value-creation strategy."
His rating remains unchanged at "outperform." The price target has risen to $46 from $41. Consensus is $38.56.
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Electrical equipment company Lennox International (LII-N) may face slower growth in improving margins, says Credit Suisse analyst Julian Mitchell. The company beat consensus earnings forecasts for the second quarter, despite a revenue shortfall, due to weather and issues involving an unnamed large commercial customer.
"LII beat consensus earnings forecasts for Q2, as we expected, despite a slight top-line shortfall. Much of the latter was due to issues at a large Commercial customer as well as weather; the CEO reiterated several times, though, that the pickup in temperature in late June had driven a good start for Q3. Looking ahead, we assume that margin expansion is still possible despite the input cost headwind in 2017, given ongoing productivity improvements as well as pricing, although the gross margin expansion in Q2 likely represents a peak rate of increase. Although the company is clearly outpacing its ... peers in terms of sales and earnings growth, its valuation multiple already appears to be level with much higher-margin Buildings businesses, and hence we retain our Neutral rating," the analyst said.
The "neutral" rating remains unchanged. The target price increases to $138 from $130. Consensus is $148.07.
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Citi Research analyst Michael Rollins raised his price target on Rogers Communications Inc. (RCI.B-T) because of the favourable impact of lower interest rates.
All three Canadian telecom companies received increased price targets by Mr. Rollins, but Rogers was the largest increase, to $55 from $51. He cited several factors for investors to consider regarding the company. Among them: a competitive business environment, a weaker Canadian dollar, and the outlook for the Canadian economy.
His "neutral" rating on Rogers remains unchanged. The consensus for the company is $51.80.