Longtime Netflix Bear Raises Company Outlook

Longtime Netflix bear, analyst Tony Wible of Janney Capital, on Monday lifted his rating on the streaming content provider’s shares from Sell to Neutral, citing a recent sell-off and Street estimate cuts as the catalyst for changing the company’s rating.

Netflix shares are down 41 percent since the end of March.

“We are not changing our views on the longer term headwinds for the company tied to a slowdown in sub growth and the cannibalization of the high margin DVD business,” Wible said in a research note. “However, this is tempered in the near term by studio dependency, lack of competition, slower decline in DVD, new compression technology counteracting UBB, potential M&A, and cost rationalization.”

He added: “studios have become increasingly dependent on NFLX, as competitors have been inept to date, and as NFLX scales its streaming margin (albeit with lower quality improvements). Furthermore, we see the company benefiting from new compression technology and the potential for new services and/or acquisition opportunities that incrementally ease long-term survival and usage-based billing concerns.”

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