Netflix Chief Financial Officer David Wells is stepping down, but analysts at Monness, Crespi, Hardt & Co. aren’t worried.
“We would not read much into today’ s announcement,” wrote the firm’s internet and software analyst Brian White in a Monday note. He reiterated his buy rating and $430 price target for the company, calling Netflix NFLX, -1.00% a “strong, global, secular growth story.”
The stock slumped 0.7% in midday trade Monday. White’s stock price target implies a 25% rally from current levels.
“The combination of engaging new content, momentum in overseas markets and a business model that scales globally increasingly sets Netflix apart from its legacy competitors,” he wrote.
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Netflix announced early Monday that Wells would be stepping down from his position as CFO. “I intend my next chapter to focus more on philanthropy,” Wells said in a statement. “I like big challenges, but I’m not sure yet what that looks like.” Netflix said Wells would help choose a successor and stay on until the new CFO takes over.
White dismissed any rumblings that the departure was in any way prompted by Netflix’s second-quarter earnings miss. The company added 5.15 million streaming users in the second quarter, a substantial drop from the 6.2 million estimate the company provided in April. “Today’s news could be cast in a negative light,” White wrote. “However, given the tremendous growth experienced under David Wells’ tenure as CFO of Netflix, we believe this plans to step down from the company should be viewed as more of a coincidence after a light quarter than something more sinister,” he wrote.
White said he was confident that Netflix would find a suitable successor to Wells. “Given the tremendous success of Netflix over the years and a future that we view as very bright, we believe the company will be able to attract a high-quality CFO,” he wrote. Netflix said it would be considering candidates from both inside and outside the company.
Wells joined Netflix in 2004 and stepped into the CFO role in 2010. During his tenure, Netflix sales grew from $2.16 billion in 2010 to what FactSet analysts estimate will be $15.87 billion in 2018, more than a seven-fold increase.
Netflix shares have gained 79% so far this year, while the S&P 500 SPX, -0.22% has gained 6%.
