Netflix (NFLX) in the near-term may look like a profitable bet, but two analysts took shot at the DVD-by-mail company today, sending shares lower in morning trading.

Oppenheimer's Jason Helfstein downgraded the company to underperform from perform saying DVD purchases are becoming more enticing for consumers, leaving less people looking to rent. Netflix, he says, may not fit in the changing entertainment industry.

"Studios are seeking to increase revenue by expanding distribution and better aligning their economics with emerging industry trends," he wrote in a note on Friday.

Helfstein said a recent Sony-Redbox distribution deal and Disney's announcement that it will package micro-SD chips with DVDs will likely make movies more accessible and cheaper for consumers.

Likewise today, analyst Tony Wible of Janney Montgomery Scott said Netflix is overvalued.

On Thursday, Netflix posted a 22% jump in second-quarter earnings. But today investors seemed to be listening more to the analysts. Shares of Netflix tumbled 7.7% in morning trading to $42.87.

The company has been working at expanding its movie rental business, and earlier in the month said it plans to stream movies to Sony's Bravia high-definition, Internet-connected TVs starting this fall.

Netflix has also been the center of a takeover rumor that Amazon.com or Microsoft may be interested in acquiring the company.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

More from Stocks

Global Stocks Rally as US-China Trade War Thaws; Dow Could Test 25,000

Global Stocks Rally as US-China Trade War Thaws; Dow Could Test 25,000

China Trade Truce, General Electric and Tesla - 5 Things You Must Know

China Trade Truce, General Electric and Tesla - 5 Things You Must Know

The Stock Market Has Every Reason to See a Fresh Rally

The Stock Market Has Every Reason to See a Fresh Rally

3 Simple Tips on Investing From TheStreet's Jim Cramer

3 Simple Tips on Investing From TheStreet's Jim Cramer

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: There Are Some Big Changes Coming to the PGA Championships in 2019