SunTrust Robinson Humphrey Starts Netflix (NFLX) at Neutral

SunTrust Robinson Humphrey analyst Robert Peck initiated coverage on Netflix (NASDAQ: NFLX) with a Neutral rating and a price target of $525, saying while they view the story as favorable valuation leaves them on the sidelines.

Peck commented, "We believe NFLX to be the dominant internet streaming video service, offering consumers a robust yet highly curated selection of premium television and movie content. The company is at the forefront of the secular shift to premium streaming video and boasts a large installed customer base, strong brand, focused strategy, superior monetization model, and growing portfolio of differentiated original content. This has all culminated in outstanding financial and stock price performance."

He added, "Our valuation analysis leads us to a $525 year-end 2015 price target, equating to ~10% upside but not enough to justify a Buy rating. Further, while we are comfortable with near-to-intermediate-term top-line expectations, we do not see upside to margins/bottom-line as we suspect international profitability may be slower to turn up as the company invests in content and brand. The continued launch of new markets and original content should also continue to weigh on cash flow (FCF could trail expectations). Finally, we see less optionality with NFLX as compared to our Buy rated names (i.e. do not view NFLX as a likely acquisition candidate; ad-subsidized discount subscription tier quite possible but unlikely to move the needle."

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 $479.01 yesterday.

You May Also Be Interested In

• Needham Upgrades Netflix (NFLX) to Buy, 'on Rev Upside from Tech Stack'
• B.Riley Resumes EverQuote (EVER) at Buy
• RBC Capital Starts Inspire Medical Systems (INSP) at Outperform