With a new year comes the wind of change, and while this applies to starting new diets, vowing to be kinder to one another, and planning to save/make more money, change is also on the horizon for Netflix, Inc. (NASDAQ:NFLX). Up until now, Netflix has maintained the lead on streaming movies and television shows, but with the start of 2014, digital streaming will become more competitive, putting Netflix, Inc. (NASDAQ:NFLX) at risk. Analysts are recommending SELL NFLX before the company starts to struggle with the change in the digital market, but there are still other analysts who are finding potential revenue in new business plans, and instead recommend HOLD NFLX.
Due to foreseen competition from various services such as Amazon Prime Instant Video, HBO GO and Hulu Plus, analyst Benjamin Swinburne advises SELL NFLX. Each unique service could potentially monopolize its own section of the market and infiltrate Netflix’s steady subscriber growth. Just taking a look at the numbers, Benjamin noted, “Even if Netflix’s churn levels fall to record lows, we estimate that over 48MM out of 92MM residential broadband households (~53%) would need to watch Netflix, Inc. (NASDAQ:NFLX) over the next 12 months to meet our 2014E domestic sub forecast of 39MM,” the report said. “If monthly churn is closer Netflix’s long-term average of ~4%, the number of households would need to reach ~52MM (~57%).” Benjamin Swinburne is ranked 1019 out of 2319 and has a 54% success rate of recommended stocks.
Analyst Scott Devitt of Morgan Stanley also agrees with Benjamin’s SELL NFLX rating and cut his 12-month base case estimate from $333.00 to $310.00. With competition on the rise, Scott noted, “This could challenge Netflix, Inc. (NASDAQ:NFLX)’s gross subscriber growth and lead to higher U.S. marketing [and] content costs.” Scott is ranked 206 out of 2319 analysts and has a 54% success rate with an +2.8% average return over S&P-500.
On the other hand, analyst George Askew recommends HOLD NFLX in response to the company’s introduction of a potential new price scheme. Right now, Netflix, Inc. (NASDAQ:NFLX) is testing a lower entry price point to stream videos as low as $6.99. George thinks, “the new pricing, if formally rolled out, could add to revenue this year.” George is ranked number 7 out of 2319 analysts and has a 73% success rate of recommended stocks with a +13.6% average return over S&P-500.
It looks like Netflix, Inc. (NASDAQ:NFLX) is in for a ride this year, but analysts are following closely and have already started to put their two cents in regarding the leading digital streaming company. To continue following what analysts have to say about Netflix, and other companies,download TipRanks and staring making informed financial decisions today.
By: TipRanks
