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Even With 'Tiger King', No Netflix and Chill for This Analyst

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Netflix  (NFLX) - Get Netflix Inc. Report and sell? In a stay-at-home, once-in-a-century pandemic?

Yes, according to Benchmark Co. analyst Matthew Harrigan, who on Friday initiated coverage of the streaming media giant with a sell rating and a one-year price target of $327, roughly 25% below the stock's current price.

"Our cautious view is based on our belief that the shares already reflect a 'lazy long' halo from the perception of a Covid-19 safe haven," Harrigan wrote, adding that even with high customer additions and lower churn, mounting competition and potentially restricted pricing power bode ill for Netflix’s longer-term earnings.

Indeed, a return to normal activity for the world combined with starker economic realities that prompt consumers to cut back on non-essential services like streaming will be challenges for Netflix, as will increased competition from the likes of Disney+ (DIS) - Get Report, Comcast's (CMCSA) - Get Report Peacock, and HBO Max from AT&T (T) - Get Report, which is expected to launch next month.

At current valuations, the stock “fully recognizes its global streaming leadership and the pop culture appeal of transient hits like ‘Tiger King,’” Harrigan said.

Other analysts disagree. Bernstein's Todd Juenger earlier this month wrote his own assessment of Netflix, concluding the Los Gatos, Calif. company will benefit from the ongoing shelter-in-place measures by the coronavirus pandemic.

"[As] an increasing number of people experience Netflix, at an especially high rate of usage, they will be loath to go back to life without it," Juenger said after raising his price target on the company to $487 a share from $423.

"[One] of the lasting cultural impacts of the Covid-19 crisis will be to accelerate the adoption of streaming video, and further ingrain it into the culture." 

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