
Netflix (NFLX) Stock Drops, Downgraded at Jefferies
NEW YORK (TheStreet) -- Shares of Netflix (NFLX) - Get Report are falling 2.46% to $95.50 in pre-market trading Wednesday after Jefferies cut its rating on the stock to "underperform" from "hold."
The firm also slashed its price target to $80 from $120 on shares of the Los Gatos, CA-based Internet television network.
"Although NFLX's runway will span multiple years, our research suggests the domestic subscriber growth trajectory may be somewhat flatter than the market's current expectations. While Int'l will remain strong, we think the slowing U.S. market will pressure the stock's multiple," Jefferies wrote in an analyst note this morning.
Given the number of new products that have launched in the past year and investment made by existing platforms, such as Hulu and Amazon.com (AMZN), the firm believes the landscape will be much more competitive over the next five years.
Additionally, "we continue to believe that U.S. content owners are becoming more selective in licensing content to NFLX, which will impact the library of available network shows," Jefferies noted.
While the firm recognizes the long-term growth opportunity internationally, it believes growth will be more challenging than expected in the near-term, making growth nonlinear.
"Key challenges include a limited amount of local content, language barriers, an expensive price point in certain markets, and underdeveloped payment processing / broadband infrastructure," Jefferies added.
Yesterday, Netflix stock was downgraded to "hold" from "buy" at Needham.
Separately, the company saidComcast (CMCSA) will allow the streaming service onto its X1 platform.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
Separately, TheStreet Ratings Team has a "Hold" rating with a score of C+ on the stock.
The primary factors that have impacted the rating are mixed. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and increase in net income.
But the team also finds weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.
You can view the full analysis from the report here: NFLX










