Citigroup On Netflix: 'Waiting For The Blurry Picture To Come Into Focus'

Mark May of Citigroup commented in a note to clients on Tuesday that shares of

have significant upside, but under a few conditions. May notes that he first needs confirmation that the deceleration in domestic subscriber growth in the third quarter is “not a new trend-line.” The analyst continues to look at Netflix's international subscriber growth in the third quarter and fourth quarter outlook for signs that the company is not experiencing poor demand in recently launched countries. The analyst adds that

Trends data (which has shown a high correlation to Netflix's subscriber additions) hints that third quarter trends have not shown any improvements and the company will continue operating with unresolved negative overhangs. “Our analysis of search data suggests that the newer international markets are experiencing a faster deceleration than earlier markets,” May wrote. “As such, at this point we do not expect upside to fourth quarter estimates.” With that said, May maintains a Neutral rating with a $364 price target and advises investors to “stay on the sidelines.”