Internet streaming giant Netflix is the best-performing component of the S&P 500 so far in 2015, up a scintillating 108% as of Tuesday’s close. The company is scheduled to report its second quarter earnings after the close on Wednesday, July 15th.

Analysts Say Netflix, Inc. Will Meet Estimates In Q2

Consensus analyst estimates are for revenue of $1.65 billion with earnings per share of $0.31 (based on the pre-split share count). Of note, Netflix undertook a 7 to 1 stock split yesterday in order to make shares more accessible to smaller investors.

Preview of Netflix second quarter 2015 earnings

Netflix Earnings Preview

Justin Patterson and colleagues at Raymond James say they expect that second quarter 2015 earnings will be roughly in line with Wall Street estimates. They project revenue of $1.63 billion (up 22% year over year), just less than the consensus of $1.65 billion. Their U.S. and international streaming revenue estimates of $1.02 billion (+22% y/y) and $450 million (+46% y/y) are in line with guidance. EPS estimate of $0.05 is +$0.01/share above consensus and guidance (adjusted for 7:1 split). They project total U.S. subscribers of 42.0 million (+16% y/y), which is line with guidance. They project international subscribers of 22.83 million (+65% y/y), just over consensus of 22.78 million.

Given that the second quarter of 2015 is a seasonally slower quarter, the RJ analysts expect Netflix focuses on the usage around original content instead of total streaming hours. They highlight that both new and returning programs are getting good reviews, which will decrease churn, drive word of mouth marketing and boost cash flow.

Netflix Earnings Preview

The Raymond James team points out that both U.S. and international new subscriptions were below consensus and guidance in the third quarter of 2014, prompting a drop in share price. They are therefore tempering their third quarter of 2015 net add expectations at no year over year growth domestically (980,000 net adds) and 22% year over year growth internationally with 2.49 million net adds.

Netflix has announced a roll out to Japan for fall 2015; Spain, Italy, and Portugal for October 2015; and India for 2016 (China TBD). Given there are relatively few launches in the third quarter, there could be some risk 3Q subscriber guidance. The RJ analysts go on to say: “this normalizes over a two-quarter period as the number of launches picks up and the timing becomes clear. ”

Patterson et al. argue that any pullback around Q3 earnings would be a good buying opportunity. They rate the stock an Outperform 2 and have a split-adjusted price target of $104 on the firm.

Rob Sanderson of MKM partners notes that Netflix had 62 million subscribers split 41 mn/21 mn between domestic and international in the first quarter. He expects domestic subsciberss to jump more than 50% and international to soar to 100 million by 2021. He argues this should produce $75-$80 in earnings per share, which you give a 25x multiple on and discounts back to get MKM’s $885 unsplit-adjusted 12-month price target. MKM rates the streaming firm a Buy.