Netflix Inc. shares fell 1% in early trade, after Deutsche Bank initiated coverage of the stock with a sell rating and $90 price target, on concerns that market expectations for the streaming giant are too optimistic. While the company has a good base for growth thanks to its first-mover advantage, its costs are rising and a takeover is unlikely, analysts wrote in a note. “This is a very long duration, high multiple investment with market expectations that appear too high through 2020, when most analysts seem to be looking for valuation support,” said the note. “We are skeptical that Netflix will be acquired.” A deal would be 25% dilutive to Disney’s per-share earnings, they wrote. On a brighter note, Netflix is winning the competitive battle for the streaming video on demand business at home and overseas, although Amazon poses a threat. “We think Amazon is the key competitor to watch,” the analysts wrote. Netflix shares have fallen 9% in the year so far, while the S&P 500 has lost 5%.
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