Netflix (NFLX) Slips as Markets Rally
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Price: $75.47 -0.16%
Rating Summary:
58 Buy, 25 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 15 | Down: 19 | New: 38
Rating Summary:
58 Buy, 25 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 15 | Down: 19 | New: 38
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Shares of Netflix (Nasdaq: NFLX) are currently trading at $64.84, down $2.72 (-4.03%), an unfortunate sag, while the rest of the market rips higher (approx. 395 pts on the DOW and 78.5 pts on the NASDAQ).
The recent downturn on NLFX was summed up this morning with another downgrade...this time from Wedbush, which lowered its rating from Neutral to Outperform.
Analyst, Michael Pachter, said, "In our view, the company's business model was broken when it raised prices for its hybrid customers, and continued customer defections will require it to invest ever-increasing amounts on marketing."
"Faced with escalating content costs and higher planned marketing spending due to its international expansion, we think that Netflix could deliver results well below the consensus estimate of a profit of $0.59/share; we expect a loss per share of $0.35, and think that our estimate may prove to be exceedingly conservative."
"Unless the company changes its strategy, we do not see upside to our $45 price target, and we see meaningful downside. In order to prompt a strategy change, company management must first admit that the current strategy is unsound, and we have seen no indication of that over the last several months. Until the company acknowledges that growth at all costs is a bad idea, we do not believe that marketing spending will be reined in, and we think that Netflix is positioned to lose substantially more than we have modeled."
Also, yesterday, Canaccord Genuity Tech Analyst, Jeff Rath, cut his price target on NFLX from $60 to $57, while maintaining a Sell rating.
Rath viewed the recent $400 million capital raise announcement as a positive, but admits this confirms near-term pressure in the company's business. Rath also feels that international contribution losses could exceed $100 million in Q1/12 alone and that competition (both domestic and int'l) is a material concern (citing legitimate contenders from both Dish Networks (Nasdaq: DISK) and Amazon (Nasdaq: AMZN).
The recent downturn on NLFX was summed up this morning with another downgrade...this time from Wedbush, which lowered its rating from Neutral to Outperform.
Analyst, Michael Pachter, said, "In our view, the company's business model was broken when it raised prices for its hybrid customers, and continued customer defections will require it to invest ever-increasing amounts on marketing."
"Faced with escalating content costs and higher planned marketing spending due to its international expansion, we think that Netflix could deliver results well below the consensus estimate of a profit of $0.59/share; we expect a loss per share of $0.35, and think that our estimate may prove to be exceedingly conservative."
"Unless the company changes its strategy, we do not see upside to our $45 price target, and we see meaningful downside. In order to prompt a strategy change, company management must first admit that the current strategy is unsound, and we have seen no indication of that over the last several months. Until the company acknowledges that growth at all costs is a bad idea, we do not believe that marketing spending will be reined in, and we think that Netflix is positioned to lose substantially more than we have modeled."
Also, yesterday, Canaccord Genuity Tech Analyst, Jeff Rath, cut his price target on NFLX from $60 to $57, while maintaining a Sell rating.
Rath viewed the recent $400 million capital raise announcement as a positive, but admits this confirms near-term pressure in the company's business. Rath also feels that international contribution losses could exceed $100 million in Q1/12 alone and that competition (both domestic and int'l) is a material concern (citing legitimate contenders from both Dish Networks (Nasdaq: DISK) and Amazon (Nasdaq: AMZN).
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