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Analyst Says Netflix Shares Haven’t Hit Top

27 Apr, 2009 By: Erik Gruenwedel


Despite some market reservations about Netflix Inc.’s escalating streaming costs and exceedingly high price-per-earnings ratio, Citi Investment Research analyst Mark Mahaney April 27 upgraded the company’s stock to “buy” from “hold”.

The analyst said Netflix’s 15% drop in share price over the past two weeks had created opportunity for investors to invest in a company whose stock he described as “economically defensive.”

“We view this as an expectations correction, not a fundamentals correction,” Mahaney said in a note. “We believe this creates an attractive entry point for one of the Internet sector’s best core long thesis stocks.”

Last week Pali Capital analyst Stacey Widlitz cautioned the content quality of Netflix’s Watch Instantly streaming service, which is free to subscribers.

Wedbush Morgan Securities’ Michael Pachter said the service would invest about $100 million in streaming license fees this year. He also said Netflix’s shares traded at nearly twice the market multiple.

Netflix shares closed up more than 8.5% ($3.64) to $46.37 before falling 60 cents in aftermarket trading.

As a policy Netflix does not comment publicly regarding analyst projections or movement of its stock.

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