J.P. Morgan downgraded Blockbuster (BBI) and Netflix (NFLX) to neutral from overweight Friday, noting rising competition in the online DVD arena.

Morgan cited the continuing decline of Blockbuster's stores while applauding a jump in online subscriber growth. The firm believes Netflix could miss subscriber targets for the soon-to-be-reported quarter as competition from Blockbuster rises.

The news comes as shares in the companies are on opposing arcs. Blockbuster shares have risen 20% since the Friday before Christmas, while Netflix shares have dropped 20% since the start of December.

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