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Netflix could top subscriber expectations: Analyst

Netflix (NFLX) is primed to beat U.S. subscriber growth expectations in the second-quarter. That’s according to Piper Jaffray Analyst Michael Olson who reiterated his overweight rating and $440 price target on shares.

In a note to investors, Olson highlighted Piper Jaffray’s analysis of Google search trends, which he says point to an uptick of domestic subscribers of 11.7% from the previous year, higher than Netflix’s guidance of 8.2%

“Our analysis of Netflix search trends points to a strong Q2 for domestic subs, with international essentially in-line,” Olson wrote.

For international subscribers, Olson said their search index suggests 45.8% growth, versus guidance of 36.5%.

The Netflix logo is pictured on a television in this illustration photograph taken in Encinitas, California, U.S., January 18, 2017. REUTERS/Mike Blake

Olson said the search index has historically overstated actual results by an average of 100 basis points over the past four quarters.

“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.”

Olson also highlighted hurdles facing Netflix, including competition.

Disney (DIS) announced it would be going toe to toe with Netflix with the launch of its own streaming service Disney+. That service is scheduled to debut on November 12, 2019. Some analysts predict the platform will reel in 65 million subscribers by 2024.

Netflix is scheduled to report second-quarter results after the bell on July 17.

WallStreet is expecting earnings in the second quarter of 2019 of 56 cents a share and revenue of $4.93 billion according to Bloomberg-compiled estimates.

Bridgette Webb is a producer at Yahoo Finance. Follow her on Twitter @bridgetteAwebb.

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