NEW YORK (TheStreet) -- The shares of Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report are falling after research firm Evercore ISI downgraded the stock to Sell from Hold. Increased competition will force the company to increase its investments and the return from those investments is uncertain, the firm contends.
WHAT'S NEW: In the U.S., technological advancements are enabling content providers to sell their programming to a wider range of Internet video distributors, Evercore ISI analyst Ken Sena wrote in a note to investors earlier today. Moreover, content providers themselves are now able to stream more of their programming online and obtain higher profits from doing so, Sena reported. The analyst noted that Apple (AAPL) - Get Apple Inc. (AAPL) Report recently obtained a three month exclusive deal to stream content form Time Warner's (TWX) HBO. Now, while Yahoo (YHOO) , Amazon (AMZN) - Get Amazon.com, Inc. Report, and Hulu (DIS) - Get Walt Disney Company Report, (CMCSA) - Get Comcast Corporation Class A Report, (NWSA) - Get News Corporation Class A Report are all reportedly interested in obtaining streaming rights to "Seinfeld." Netflix's international expansion will not be sufficient to offset the increased competition, especially because foreign viewers are likely to watch less TV and be less interested in paying for TV content, the analyst believes. Furthermore, Netflix will face more competition from other Internet TV services overseas than in the U.S., according to Sena, who cut his 2015 consolidated operating income estimate for the company by 26% to $381M from $517M previously. In addition to cutting his rating, Sena lowered his price target on the shares to $380 from $450.
PRICE ACTION: In early trading, Netflix sank $16, or 3.7%, to $422.
Reporting by Larry Ramer.
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