ETF Trends
ETF Trends

Quarterly results from Netflix (NasdaqGS: NFLX) after Monday’s closing bell could move exchange traded funds (ETFs) that invest in Internet stocks early this week.

Netflix accounts for roughly 4% of First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) and PowerShares Nasdaq Internet Portfolio (NasdaqGM: PNQI).

Wall Street is expecting a strong quarter from Netflix, which ended 2010 with about 20 million subscribers to its DVD-rental service. The company also streams video over the Internet.

Netflix is a Wall Street darling but its growth is attracting competition from Amazon (NasdaqGS: AMZN) and others.

Jefferies analysts in a Netflix earnings outlook said they expect growth to come in at the high end of expectations. However, the “plethora of content streaming deals signed recently” compelled the analysts to cut their profit estimates for 2012 and beyond.

“While we see ways for the stock to still work from here, we believe that the risk/reward is biased to the downside,” said Jefferies, which has a hold rating on Netflix and a price target of $210 on the stock.

Morningstar analyst Michael Corty in a recent update on Netflix said the company’s growing subscriber base is a “head start” rather than a sustainable competitive advantage in streaming content.

“We acknowledge Netflix’s rapidly growing subscriber base and respect the value it offers its subscribers,” Corty wrote. “However, we think the optimism currently priced into the shares does not account for the changes in content delivery that will lead to heightened competition for Netflix.”

Analysts polled by Thomson Reuters are looking for Netflix earnings of $1.08 a share on revenue of $703.6 million, on average.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.