Wednesday, March 16, 2011

Netflix (NFLX) Flies on Goldman (GS) Upgrade

Shares of Netflix (NASDAQ:NFLX) rocketed up on Tuesday after Goldman Sachs (NYSE:GS) analyst Ingrid Chung upgraded the stock, saying she thinks the unveiling of competition for the video streamer is being overplayed.

Of particular note from Chung was her take that there is a higher barriers to entry in light of the subscription service model employed by Netflix.

She sees video-on-demand services offered by Amazon (NASDAQ:AMZN) as being more pressured by Facebook and others entering the streaming-video space than Netflix.

"Chung says she believes that the nearly 20 percent sell-off in recent months is an overreaction to signs of competition, especially considering that subscriber growth has been better than expected. She expects the company to add as many as 4 million subscribers *per quarter* to its 20 million subscriber base. Other reasons for optimism about Netflix: 27 percent of US consumers now stream movies or TV shows, up from 16 percent a year ago, and International prospects for Netflix are strong," said CNBC.

Netflix was upgraded by Chung from "Neutral" to "Buy." Netflix closed Tuesday at 217.11, up $15.91, or 7.91 percent. Goldman has a price target of $300 on the company.

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