Wedbush Maintains an 'Underperform' on Netflix (NFLX); Beat Primarily from Cost Control; Weak Q2 Subscriber Guidance
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Price: $237.09 -1.03%
Rating Summary:
15 Buy, 18 Hold, 10 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
Rating Summary:
15 Buy, 18 Hold, 10 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 25 | New: 24
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Wedbush maintains an 'Underperform' on Netflix (NASDAQ: NFLX) price target of $45.00.
Analyst, Michael Pachter, said, "Netflix seems sanguine about its ability to control content costs and keep losses to a minimum, and from the wording of its investor letter, it appears that the company intends to control costs by buying lower-quality television content as a replacement for high quality movie content. The loss of the Starz contract appears to have immediate repercussions, as subscriber growth is expected to slow in Q2. Should Netflix hope to return to its former high growth, we believe that the company must pay more for content in order to keep defections within a manageable range. This leaves the company with two choices: either grow fast and sacrifice profits, or grow slowly and generate a high level of profitability. We think investors have misjudged Netflix’s ability to continue to grow with inferior content, and believe that until the company provides greater insight into growth trends for content costs, subscriber growth and profitability, investors should avoid Netflix shares."
Wedbush raises FY12 EPS from (0.88) to $0.00 (breakeven).
For an analyst ratings summary and ratings history on Netflix click here. For more ratings news on Netflix click here.
Shares of Netflix closed at $101.84 yesterday, with a 52 week range of $62.37-$304.79.
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Analyst, Michael Pachter, said, "Netflix seems sanguine about its ability to control content costs and keep losses to a minimum, and from the wording of its investor letter, it appears that the company intends to control costs by buying lower-quality television content as a replacement for high quality movie content. The loss of the Starz contract appears to have immediate repercussions, as subscriber growth is expected to slow in Q2. Should Netflix hope to return to its former high growth, we believe that the company must pay more for content in order to keep defections within a manageable range. This leaves the company with two choices: either grow fast and sacrifice profits, or grow slowly and generate a high level of profitability. We think investors have misjudged Netflix’s ability to continue to grow with inferior content, and believe that until the company provides greater insight into growth trends for content costs, subscriber growth and profitability, investors should avoid Netflix shares."
Wedbush raises FY12 EPS from (0.88) to $0.00 (breakeven).
For an analyst ratings summary and ratings history on Netflix click here. For more ratings news on Netflix click here.
Shares of Netflix closed at $101.84 yesterday, with a 52 week range of $62.37-$304.79.
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