Netflix price hike could bring near-term muddiness but will likely pay off, analyst says

Netflix Inc.'s Tuesday announcement of price hikes for U.S. subscribers could mean for a tempered financial forecast when the company reports results on Thursday, Stifel analyst Scott Devitt wrote. "We are bullish on the company's ability to execute the pricing increase, though note in the near-term, domestic subscribers churn may tick up as the company introduces the new pricing levels to existing members," he said in a note to clients. "We see the potential for cautious 1Q guidance on domestic paid net subscriber additions due to this factor." He thinks Netflix could continue raising U.S. prices every 16 to 18 months, given that the company's offering is still cheaper than HBO's, despite representing a larger content library. Piper Jaffray's Michael Olson is upbeat about the price hike, noting the company's stable churn rates. "From a churn standpoint, in late 2017 Netflix raised U.S pricing by $1/mo and there was no change in net sub growth," he wrote. Netflix shares are up 6.2% in Tuesday morning trading. The stock has gained 32% so far in January, while the S&P 500 has risen nearly 4%.

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