Netflix's Stock Rises 10.5 Percent on Analyst Upgrade

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Netflix's stock on Monday hit its highest price since July after Morgan Stanley upgraded it, saying investor concerns over online video competition from Amazon.com is overstated.

Analyst Scott Devitt said talk about challenges from Amazon's Prime Instant Video service is “overblown," predicting that the e-tailer would stick to offering it to promote Amazon purchases and the firm's Kindle Fire instead of making it into a standalone service that would compete more directly with Netflix.

Bloomberg News had reported that he upgraded the stock to "overweight," the equivalent of a "buy" rating. 

Netflix shares rose 10.5 percent to $73.52, the stock's highest price since July 24. That gave the stock a market value of $4.08 billion and left it 6.1 percent ahead of its 2011 closing price for the year to date after being down for the year as of a few days ago.

It had hit a 52-week low of $52.81 in early August. Its 52-week high came in February at $133.43.

Devitt also argued that Netflix continues to have more streaming content available than Amazon. He estimated that the company would need to spend as much $1.2 billion to match Netflix’s lineup of content.

“Previously, we were very concerned about Amazon.com’s Prime Instant Video offering,” Devitt wrote, but that has changed.

Last week, Citigroup analyst Mark Mahaney said in a report that Netflix, led by CEO Reed Hastings, has managed to improve its customer satisfaction following a 2011 price increase and a reversed attempt to separate its online and DVD rental services. That report also helped boost the stock more than 10 percent.

Email: Georg.Szalai@thr.com
Twitter: @georgszalai