To contextualize that price, Netflix, which has an admittedly ample balance sheet, still carried just $350 million of cash and equivalents at fourth quarter's end and $236 million of debt. That cash could easily be depleted in order to ink just one or two new deals for online content. Morningstar forecasts 18% average annual growth over the next five years and a subscriber base of 40 million for Netflix by 2015. Still, it believes the operating margin will stagnate, or perhaps, decline from just over 13% and sees heightened competition.

Morningstar's fair-value estimate, at $110, suggests that Netflix's stock could drop 51%. It awards Netflix a one-star rating out of a possible five and a "high uncertainty" ranking. Buyers, beware.

-- Written by Jake Lynch in Boston.


Become a fan of TheStreet on Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

Earnings Will Lead Market Higher Says Nuveen's Bob Doll

Insider Trading Alert - DFS, SLM And MORN Traded By Insiders

ADBE, CRM and AVGO: Jim Cramer's Views