Analyst Youssef Squali says non-GAAP fourth-quarter earnings per share of 19 cents beat estimates. He notes rapid subscriber growth has prompted the online video-subscription company to anticipate reaching $1 billion in revenue and 5% market penetration in the 2006-07 timeframe -- faster than the earlier estimated timeframe of 2007-09.
Squali thinks the company's move to grab market share through higher marketing spending (including TV advertising) is critical at this time, given the lack of meaningful competition. He upped the $430 million 2004 revenue estimate to $470 million for stronger subscriber growth, but cut the $1.33 non-GAAP 2004 earnings per share to $1.29 for a higher marketing expense.
Squali also upped the $55 target price to $72. He maintains his buy rating.