Morgan Stanley analysts turned bearish on the stock in their latest ratings report, downgrading the streaming service to "underweight" with a $310 price target from a previous "equal-weight" rating.
"We expect competition in US digital video streaming to grow tighter in 2014 as services like Amazon (AMZN) Prime Instant Video, HBO GO, and Hulu Plus offer compelling alternatives to Netflix's service and each could corner specific segments of the market," said the investment bank in a research report. "This could challenge Netflix's gross subscriber growth and lead to higher US marketing/content costs."
In pre-market trading, the Los Catos, Calif.-based business shed 3.3% to $347.64.
TheStreet Ratings team maintains Netflix Inc as a Hold with a ratings score of C. The team has this to say about their recommendation:
"We rate NETFLIX INC (NFLX) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows: