Netflix climbs after analyst says the streaming giant will smash expectations for subscriber growth

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  • Netflix climbed on Tuesday morning after Piper Jaffray analyst Mike Olson upped his estimates for domestic subscriber growth.
  • Olson's analysis predicts Netflix's second quarter domestic subscriber growth could beat the company's estimate of 8.2% and reach as much as 12%.
  • Netflix shares rose almost 3% on the news.
  • Watch Netflix trade live.

Netflix shares jumped as much as 3.1% on Tuesday morning after an analyst at Piper Jaffray projected better than expected US subscriber growth for the second quarter.

A team led by Mike Olson, a senior research analyst at Piper Jaffray, conducted an analysis of Google search trends and determined that Netflix's second-quarter domestic subscriber growth could be close to 12%. That would easily outpace the company's guidance of 8.2%.

Olson also found that Netflix's year-over-year international subscriber growth could hit more than 45%, beating the company's estimate of 36.5%.

"Netflix leads a category that contains multi-year growth potential." Olson said. "As consumer dollars shift from traditional TV to streaming, we think the market will support multiple players, with Netflix leading the way.

Olson also expects Netflix to reach 195 million global subscribers by the end of 2020. Piper Jaffray's has a $440 price target for Netflix.

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This report comes just after Morgan Stanley increased its price target for Disney based on a new and improved outlook for the entertainment conglomerate's streaming subscriber growth.

Olson said his team's analysis could be overstating actual subscriber growth, but it still suggests there's more upside.

"We would not directly apply the index's implied growth rates and it is important to take note of historical error in our model, but the index is directionally positive for domestic and relatively in-line for international through two months of Q2," he said.

Netflix is set to report its second quarter results after the closing bell on July 17. Analysts expect earnings per share of $0.58 and revenue of $4.51 billion. Netflix has beat EPS estimates for the last five quarters.

Netflix is up roughly 35% this year.

Netflix shares

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