Streaming giant Netflix (NFLX – Research Report) is on the cusp of releasing its earnings report for the third quarter. What can we expect from the big event, scheduled for October 16 after the closing bell? And what topics should we really be paying attention to from the earnings call? Here we take a closer look at what the Street’s top-performing analysts have to say- and whether they see the stock as a buy, hold or sell as we head into the print.

First: Share Price

So far shares have had a very rocky run this year. Prices are currently trading down 14% on a three-month basis, and almost 8% on a one-month basis. To put it another way, we are now 24% off June’s all-time high. But the outcome of this is that prices are beginning to look more attractive. 

Top Citigroup analyst Mark May  (Track Record & Ratings) has just upgraded NFLX from Hold to Buy. Previously, May stayed sidelined on the stock due to its excessive valuation. However he now believes the stock is trading at reasonable levels, and even advises investors to buy the dip. This is a ‘high quality franchise’ May tells investors. We are looking at an attractive recurring subscription-based revenue model, a product that offers “significant [consumer] value”, and a very competent management team.

Bottom line: Netflix has strong fundamentals that should support expansion, especially internationally, where it can exert pricing power, May said. He sees the free cash flow burn easing by year-end and turning positive in 2020 or 2021.

May retained his $375 price target.

Best of the Mega Caps

Similarly, MKM Partners’ Rob Sanderson  (Track Record & Ratings) blames the stock’s “meaningful” pullback on broader market volatility- saying Netflix now looks “attractive again”. He cites a “solid looking performance from the content slate”, along with upcoming new content and relatively conservative expectations.