This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Netflix Catching Up to HBO Quality

NEW YORK ( TheStreet) -- Netflix (NFLX - Get Report) is catching up to cable and satellite TV network HBO on brand quality, according to BTIG analyst Richard Greenfield.

Greenfield on Monday finally began coverage of Netflix with a "buy" rating and $250 price target after BTIG's media equity research team for years wrote more about Netflix than any other company they were following but had been "scared" to put a rating on the stock given the disconnect between the stock price and underlying fundamentals.

But now, Greenfield is seeing marked improvement in the movie provider's underlying value.

For instance, the company is moving closer and closer toward possessing the "intangible quality of the brand" that Time Warner's (TWX - Get Report) HBO has, and perhaps may even have a competitive edge in this regard, by offering a far more attractive price to subscribers and a wide array of kids programming that HBO does not have.

Greenfield also lauds Netflix's critically acclaimed, but underwatched serial dramas such as "Mad Men" and "Breaking Bad" and its launch of original programming.

"They are trying to reach a point where consumers know that there will always be something new and interesting coming that requires a Netflix subscription, in addition to top-tier syndicated programming and a sufficient movie selection."

"Netflix just works, wherever you are, with an interface that does not require the ability to read, which is critical for children, increasing the Netflix's overall 'stickiness,'" Greenfield added.

Netflix looks also to be gaining traction overseas while continuing to make progress in its U.S. streaming business.


"While it is far from clear that Netflix 'wins' outside the U.S., we believe recent international sub trends demonstrate consumer demand exists outside the U.S. and that Netflix is not simply throwing money into a black hole."

Overall, Greenfield says his positive coverage initiation on Netflix reflects the strengthening relationship between the stock's price and actual value. Expectations are that subscriber churn rates will drop and additions will rise as customers increasingly move to streaming on Netflix, attracted by more and more high-quality, original programming.

The pace by which the company's domestic revenue growth outpaces Netflix's spending on digital content should accelerate in 2014 and beyond, said the analyst.

Time Warner Inc. was down 0.94% to $58.90 Monday and Netflix was popping 3.18% to $178.70.

Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
NFLX $475.52 -0.98%
TWX $83.03 0.31%
AAPL $129.30 0.16%
FB $79.39 -0.45%
GOOG $574.32 0.52%

Markets

DOW 18,210.21 -78.42 -0.43%
S&P 500 2,107.37 -10.02 -0.47%
NASDAQ 4,976.6240 -31.4720 -0.63%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs