Dj Tegna Price Target Raised To $19.00/Share From $16.00 By Jp Morgan

Netflix NFLX shares have appreciated 63.3% year to date (YTD), outperforming the broader Zacks Consumer Discretionary sector’s appreciation of 8.6%.

It has also outperformed the Zacks Broadcast Radio and Television industry’s appreciation of 37.3% year to date.

NFLX shares’ outperformance can be attributed to its growing subscriber base, driven by expanding local and international content offerings and increasing engagement levels.

The company had 282.72 million paid subscribers across 190 countries globally at the end of the third quarter of 2024 and it expects paid additions to increase in the fourth quarter due to normal seasonality.

Netflix is benefiting from its expanding domestic and international content offerings that are aiding in driving user growth. NFLX’s investment in creative communities in India, Japan, Thailand, Korea and other international markets is improving user retention and driving top-line growth.

Netflix, Inc. Price and Consensus

Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote

At the end of the second quarter of 2024, user engagement was reported to be 2 hours of viewing per member per day.

Netflix’s Expanding Indian Portfolio to Benefit Prospects

NFLX recently announced the trailer of Nayanthara: Beyond the Fairytale, a documentary set to launch on Nov. 18, 2024. The documentary will feature narrations from Vignesh Shivan, Rana Daggubatti, Taapsee Pannu, and Nagarjuna Akkineni and will give viewers a peek into the Lady Superstar’s magical life.

Netflix’s strategy to drive its active user base is focused on regional programming and a diversified foreign language content portfolio. Netflix India’s Maharaja, a historical drama film starring Vijay Sethupathi and Anurag Kashyap, generated a viewership of 22.6 million after its release in June 2024 and is one of the studio's most viewed productions.

Apart from India, Netflix is releasing content for several other international locations like Japan, Korea, Brazil and Thailand, to name a few.

The company is set to launch two of its biggest Latin American shows in December 2024. Senna, a biopic of one of the greatest Formula One drivers from Brazil and A Hundred Years of Solitude, a show based on Gabriel García Márquez’s novel from Colombia, are some anticipated hits that are expected to increase on-demand viewership in the area in the fourth quarter of 2024 and thereby drive topline.

In the fourth quarter of 2024, Netflix’s returning series Squid Game S2 and Outer Banks S4, as well as Black Doves, a drama starring Keira Knightley, are expected to drive the top line by increasing user retention and subscription prospects.

Netflix’s efforts to deliver customized content to viewers by developing and improving monetization and refined plans and pricing aids prospects. While NFLX has increased prices in EMEA countries, it has also altered prices in Spain and Italy.

Further, Netflix’s recent offerings in the live event market have strengthened its leadership position as a streaming service provider by expanding its footprint to engage with customers who are inclined toward live television.

Mike Tyson and Jake Paul boxing match set to take place on Nov. 15, 2024, and Christmas Day NFL games, with the Kansas City Chiefs against the Pittsburgh Steelers and the Baltimore Ravens against the Houston Texans, are some of its unscripted and high-value live events that are expected to positively impact the on-demand viewership hours in the fourth quarter of 2024.

Netflix’s Guidance Positive

For the fourth quarter of 2024, Netflix expects revenues to be $10.12 billion, indicating an increase of 15% year over year.

The consensus mark for fourth-quarter 2024 revenues is pinned at $10.15 billion, indicating year-over-year growth of 14.95%.

For the fourth quarter of 2024, Netflix expects its earnings to be $4.23 per share.

The Zacks Consensus Estimate for fourth-quarter 2024 earnings is currently pegged at $4.2 per share, up 9.6% in the past 30 days and suggesting a year-over-year increase of 99.05%.

The Zacks Consensus Estimate for 2024 earnings is currently pegged at $19.78 per share, up 64.42% year over year and indicating an increase of 3.7% in the past 30 days.

NFLX’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, and missed in one, the average surprise being 5.73%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

For fiscal 2025, based on F/X rates as of Sept. 30, 2024, Netflix expects revenues of $43-$44 billion, indicating growth of 11-13% from 2024 revenue guidance of $38.9 billion, driven by an increase in paid subscribers and ARM.

Netflix expects a fiscal 2025 operating margin of 28% (also based on F/X rates as of Sept. 30, 2024) compared with a forecast for 27% in 2024 and ads revenues are expected to roughly double year over year in 2025.

Should Investors Jump Into Netflix Stock?

Netflix stock is not so cheap, as the Value Score of D suggests a stretched valuation at this moment.

In terms of the forward 12-month Price/Earnings (P/E) ratio, NFLX is trading at 34.4X, higher than the Zacks Consumer Discretionary sector’s 19.36X.

Netflix faces stiff competition from industry competitors, namely Fox FOXA, Roku ROKU and TEGNA TGNA.

While ROKU’s popularity is driven by the Roku Channel and Roku TV Program, FOXA rides on the growing viewership of Tubi, Fox News and Fox Business Network. TGNA’s long-term agreements with NBC, CBS and ABC are a concern for Netflix’s prospects.

However, NFLX’s expanding international content portfolio and clientele bodes well for the investors.

Netflix currently carries a Zacks Rank #2 (Buy), which implies that investors may want to jump into NFLX stock.

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Zacks Investment Research

TEGNA’s TGNA third-quarter 2024 non-GAAP earnings of 94 cents per share beat the Zacks Consensus Estimate by 13.25% and increased 141.02% on a year-over-year basis.

TGNA’s earnings beat the Zacks Consensus Estimate in three of the four trailing quarters, while missing once, with the average surprise being 3.22%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Revenues increased 13% year over year to $806.8 million, beating the Zacks Consensus Estimate by 1.82%. The year-over-year increase was primarily due to strength in political advertising dollars and positive growth in subscription and advertising and marketing services revenues.

Following third-quarter earnings, TGNA shares were down 0.36% in after-hours trading. TGNA’s shares have gained 26.2% year to date (YTD), outperforming the Zacks Computer & Technology sector’s return of 7.4%.

During the third quarter, TEGNA returned more than $90 million of capital to shareholders with $70 million of share repurchases, representing 4.9 million shares, and paid $21 million in dividends.

TEGNA Inc. Price, Consensus and EPS Surprise

TEGNA Inc. price-consensus-eps-surprise-chart | TEGNA Inc. Quote

Quarter in Details

Advertising and Marketing Services revenues (38.78% of total revenues) increased 0.17% year over year to $312.9 million, primarily due to increased advertising related to the Summer Olympic Games, partially offset by political crowding out.

Subscription revenues (44.1% of total revenues) decreased 6% year over year to $356 million due to a decline in subscribers, partially offset by contractual rate increases.

Political revenues (15.6% of total revenues) were $126 million, a new third-quarter record, up from $11.6 million reported in the year-ago period. Full-year political advertising revenues through Election Day totaled $375 million.

Other revenues (3% of total revenues) were $11 million, up 0.3% year over year.

Non-GAAP adjusted EBITDA increased 62.4% year over year to $269.5 million. Adjusted EBITDA margin expanded 1014 basis points (bps) from the year-ago period to 33.4%.

Non-GAAP operating expenses (70.2% of total revenues) of $566 million were down 1.6% year over year. This decrease was due to a reduction in programming expenses and core cost initiatives.

Non-GAAP operating income increased 75% year over year to $223 million. The operating margin expanded 1052 bps from the year-ago period to 29.81%.

Balance Sheet & Cash Flow

As of Sept. 30, 2024, total cash and cash equivalents were $536 million.

Total debt was $2.55 billion, and net leverage was 2.8 times as of Sept. 30, 2024.

Adjusted free cash flow in the third quarter was $211.4 million compared with $121 million reported in the previous quarter.

Outlook

For the fourth quarter of 2024, Tegna expects total GAAP revenues to increase 19-21%.

Non-GAAP operating expenses are estimated to increase 1-3% in the fourth quarter 2024.

For the full-year 2024, TGNA expects the net leverage ratio to be below 3X. The company expects 2024/2025 two-year adjusted FCF between $900 million and $1.1 billion.

Zacks Rank & Key Picks

TEGNA carries a Zacks Rank #3 (Hold) at present.

Shares of TGNA have gained 26.3% year to date compared with the Zacks Consumer Discretionary sector’s increase of 7.4% in the same time frame.

Some better-ranked stocks from the broader sector that investors can consider are Madison Square Garden Entertainment Corp. MSGE, Carnival CCL and Flexsteel Industries FLXS, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of MSGE have gained 35.5% year to date. The Zacks Consensus Estimate for MSGE’s fiscal 2025 revenues is pegged at $978.29 million, indicating a year-over-year increase of 1.98%. The consensus mark for earnings is pegged at $1.66 per share, which has gained 2 cents over the past 30 days.

Shares of Carnival have gained 27.9% year to date. The Zacks Consensus Estimate for CVL’s 2024 revenues is pegged at $25.19 billion, indicating a year-over-year increase of 16.63%. The consensus mark for earnings is pegged at $1.31 per share, which has increased 2.3% over the past 30 days.

Shares of Flexsteel have gained 217.2% year to date. The Zacks Consensus Estimate for FLXS’ fiscal 2025 revenues is pegged at $433.08 million, indicating a year-over-year increase of 4.92%. The consensus mark for earnings is pegged at $3.25 per share, which has increased 8.3% over the past 30 days.

Zacks Investment Research