(Bloomberg) -- Nordic Entertainment Group shares are tanking after Netflix Inc.'s dismal first-quarter update, yet analysts are keeping their faith in the Swedish streaming company known for Formula 1 and English Premiere League live sports events.
NENT shares lost as much as 9.2% on Wednesday, repeating a pattern from January, when they dropped in the wake of Netflix's previous, fourth-quarter update.
“The primary driving force in NENT's subscriber base is premium sports,” DNB analyst Martin Arnell said by phone. Though markets often make read-across assumptions, Arnell said “NENT is a completely different case.”
While Netflix looks vulnerable after losing subscribers for the first time in over a decade, the outlook on NENT is still bullish. All ten analysts covering the stock have a buy-equivalent rating and predict the shares to rally 55% in the next 12 months.
Netflix Shares Set to Lose $40 Billion After Subscriber Shock
Handelsbanken analyst Kristoffer Carleskar said that while it was important to heed Netflix's warnings of slower subscriber growth, demand for NENT's services is much more “sticky” due to fans' propensity to pay for premium sports streaming rights.
To be sure, inflation is piling pressure on people's budgets and streaming might not be a top priority. What's more, NENT's relatively fresh U.S. exposure could take a hit. It launched Viaplay in the U.S. in December, with a focus on the group's entertainment offerings, such as Nordic noir crime shows and Nordic cinema.
NENT has lost 21% year-to-date, compared with a 12% drop on Stockholm's OMX index and Netflix's 43% plummet before U.S. trade opens on Wednesday.
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