Piper Jaffray Adds Netflix (NFLX) to Alpha List
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Piper Jaffray adds Netflix (Nasdaq: NFLX) to its Alpha List, citing near-term weakness in Blockbuster's (NYSE: BBI) DVD by mail business and expectations that DVD will be the primary vehicle for video distribution for the next several years. Piper currently has a Buy rating and $40 price target on shares of Netflix.
The firm points out that Netflix.com's traffic is still outperforming Blockbuster.com (based on Alexa traffic data). Specifically, over the last three months, Netflix's site has seen an increase of ~16% in traffic, while Blockbuster's site has seen a drop of ~10% in traffic.
Surprisingly, DVD by mail only makes up less than 20% of the movie rental market. Piper believes this leaves Netflix with a huge area to grow. Additionally, as Blu-Ray is becoming more and more popular (especially after the death of HD DVD), Piper believes "consumers will continue to transition more and more to DVD by mail vs. retail rental stores."
Netflix, Inc. provides online movie rental subscription services in the United States. [BCS]
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