Investors shouldn’t overreact to ‘confusing’ Q1 from Netflix, says Citi

Citi keeps a Buy rating on Netflix with a $400 price target into the company’s Q1 results on April 18. Relative to most quarters, Netflix’s Q1 "may be confusing" given an incipient advertising tier, slower rollout of password sharing enforcement, and questions around its "sharply lower prices" in 100 smaller, lower penetration markets, the analyst tells investors in a research note. However, Citi encourages investors to not overact to the Q1 report and to keep their "eye on the prize." It continues to believe the crackdown on password sharing won’t result in incremental revenue and that the ad tier will add 65M subscribers with average revenue per user above video on demand levels.