The Zacks Analyst Blog Highlights: Netflix, Roku, Discovery, SINA and iHeartMedia

For Immediate Release

Chicago, IL –October 21, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Netflix, Inc. NFLX, Roku, Inc. ROKU, Discovery, Inc. DISCA, SINA Corporation SINA and iHeartMedia, Inc. IHRT.

Here are highlights from Friday’s Analyst Blog:

Netflix Is Pricey: Buy These Cheaper Media Stocks Instead

Netflix, Inc.notched a fascinating third quarter that no one saw coming. This has encouraged firms to jack up their price targets for Netflix. This steers away small investors who can’t afford large stakes in such companies. Thus, if you have a taste for media stocks and don’t want to burn a hole in your pocket, there are companies trading cheap with solid growth potential.

Impressive Q3 for Netflix

Shares of Netflix jumped 7.1% on Oct 17, courtesy of a stellar earnings beat in the third quarter. The company reported earnings of $1.47 per share that surpassed the Zacks Consensus Estimate by 42 cents and was better than management’s guidance of $1.04. Moreover, earnings jumped a stellar 65.2% on a year-over-year basis.

Though this Los Gatos, CA-based company’s revenues of $5.25 billion have missed the Zacks Consensus Estimate, the metric is up 31% from year-ago levels. What’s more, excluding a negative impact of $137 million related to unfavorable foreign exchange, consolidated revenues grew 35% year over year.

To top it, the streaming giant announced net additions of 6.77 new subscribers in the third quarter. This is indeed a welcome change compared to the second quarter when Netflix had added only 2.7 million, much below the forecasted 5 million. Lest we forget, Netflix is still a leading provider of video streaming content. After all, it has nearly 60.1 million domestic subscribers and 91.5 million international members.

Price Goals Increase for Netflix    

The streaming giant’s grand third-quarter show came just in time. Analysts who were lowering their price targets and downgrading the stock post its dismal second quarter, have now adopted a different stance.

Almost 35 analysts are currently offering a 12-month price forecast for Netflix to around a median range of $400, with a high estimate of $451 and a low estimate of $188. But, if we focus on the median target range, it represents a more than 35% increase from Netflix’s last closing price of $293.35.

All these imply that Netflix is a pricey pick for now. Lest we forget, Netflix is already prohibitively expensive in the market with a P/E of 88.57, which is way ahead of the industry average of 4.3 (read more: P/E Ratio: What Is It?)

Netflix’s biggest threat is Amazon.com. When it comes to streaming services, Amazon’s market share is close to Netflix. But, Amazon is expensive as well. The e-commerce giant, in its last trading session, closed at $1,787.48.

Steer Clear of Netflix, Buy These 4 Media Stocks Instead

For those interested in media companies at a budget, it will be wise to pick low-priced stocks with considerable growth potential. We have thus selected four such stocks that also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Roku, Inc. operates a TV streaming platform. The stock currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 50% in the past 60 days. The company’s expected earnings growth for the current year is more than 100%. Roku closed at $139.07 on Oct 17, while Netflix settled at $293.35.

Discovery, Inc.operates as a media company worldwide. The stock currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 0.3% in the past 60 days. The company’s expected earnings growth for the current year is 71.6%. Discovery closed at $27.89 on Oct 17.

SINA Corporationoperates as an online media company in the People's Republic of China and internationally. The stock currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has climbed 0.8% in the past 60 days. The company’s expected earnings growth for the next year is nearly 21%. SINA closed at $41.32 on Oct 17. You can seethe complete list of today’s Zacks #1 Rank stocks here.

iHeartMedia, Inc.operates as a media and entertainment company worldwide. It operates through three segments: iHeartMedia (iHM), Americas Outdoor Advertising (Americas Outdoor), and International Outdoor Advertising (International Outdoor). The stock currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 35.2% in the past 60 days. The company’s expected earnings growth for the next year is 2.2%. iHeartMedia closed at $14.50 on Oct 17.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
Sina Corporation (SINA) : Free Stock Analysis Report
 
Discovery, Inc. (DISCA) : Free Stock Analysis Report
 
iHeartMedia, Inc. (IHRT) : Free Stock Analysis Report
 
Roku, Inc. (ROKU) : Free Stock Analysis Report
 
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