Netflix Shares Rise on Upgrade
Netflix bucked Wall Street’s losing trend Thursday by rising 5 percent after an analyst boosted his price target on the stock while the three major indexes each fell slightly.
“Heading into 2013, Netflix remains the dominant streaming video service provider by a wide margin,” wrote BMO Capital Markets analyst Edward Williams, who upped his target by $23 to $88 a share.
The stock closed $4.57 higher on Thursday to $96.58, which is higher than Williams' new price target, hence he retained his "market perform" rating on the stock.
“While competing video services, including Amazon.com, Hulu and HBO Go, are often mentioned in the same breath as Netflix, these services still trail Netflix by a wide margin,” Williams told his clients in a research note.
Williams said that Netflix generates 18 times more Internet traffic than Amazon’s competing service, 22 times more than Hulu’s and 62 times more than HBO Go's.
A recent streaming deal -- estimated at $300 million annually -- that will give Netflix access to Disney movies is also a positive catalyst for the stock, Williams said.
The analyst also dismissed upcoming competition from Redbox Instant by Verizon, a joint venture of Coinstar and Verizon, writing that the service will not have a meaningful impact on Netflix’s business because Redbox has a significantly smaller library of streaming content that excludes TV shows.