Netflix's Rating, Stock Price Target Cut At FBR & Co.

By Markets MarketWatch Pulse

Netflix Inc. was downgraded Friday at FBR & Co., which cited concerns over slowing subscriber growth, increasing competition and cash burn. Analyst Barton Crockett cut his rating on the video streaming service to market perform, after being at outperform for the last 10 months. He slashed his stock price target to $100, which is 16% above Thursday's closing price of $86.35, from $125. "Slowing subscriber growth is possible if the U.S. market nears saturation," Crockett wrote in a note to clients. He said competition could come from other streaming video-on-demand providers, such as Amazon Inc. and Hulu, which also offer services with subscription-based models. Crockett also expressed concern that cash spending will be accelerated as Netflix ramps up original hours, driving up negative cash flow this year and in 2017. "Netflix could seek to raise more debt financing for this cash burn, stocking investor concerns about cash burn," Crockett wrote in a note to clients. The stock, which rose 0.8% in premarket trade, has tumbled 25% so far this year, while the S&P 500 has lost 11%.

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