New deals help Netflix recover

The company will focus on expanding in the UK and Ireland in the next few months.

By Trefis Nov 17, 2011 12:37PM
Netflix (NFLX) is trying to get through a very tough year one step at a time "despite the foot with the bullet hole," as CEO Reed Hastings recently quipped.

The company has made some progress recently by signing content deals and expanding its reach on mobile devices. Even hedge fund manager Whitney Tilson, who famously shorted the stock, is now long.

The focus for the next few months will be on expansion in the U.K. and Ireland in 2012, which will help hedge the company against increasing competition from Amazon (AMZN) and Dish Network's (DISH) Blockbuster.

See our full analysis for Netflix


International efforts


Our price estimate of $142, implying a premium of more than 60% to the market price, reflects our long-term optimism for the company. Netflix has recently signed a multi-year deal with MGM studios to exclusively stream its first-run movies in the U.K. and Ireland.


Additionally, it inked another deal with Lionsgate UK as it prepares for its foray in this market. Netflix is also in talks with ITV to acquire some of its content for streaming in this new territory. Netflix is likely to run at a loss, at least in the first half of the year, due to several content deals it needs to strike in order to stream in the U.K. and Ireland.


Netflix International Streaming Subscribers

Domestic development


On the domestic front, Netflix and Disney's (DIS) ABC Television Group have reached a new agreement to stream seasons from ABC's shows. The company also placed its streaming service on Barnes & Noble's (BKS) Nook tablet and on Amazon's new Kindle Fire. Netflix overhauled its interface for apps on the Android mobile platform.


There is no single way to repair the damage that the company has done to itself. It is going to take a good deal of time and focused efforts to regain customer confidence. We're optimistic that Netflix will get there, and think the current valuation does not justify the potential of the company. Overall, analysts seem positive on Netflix with their price targets, and it seems like the worst is over for the company.


0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
265
265 rated 2
429
429 rated 3
612
612 rated 4
499
499 rated 5
525
525 rated 6
701
701 rated 7
533
533 rated 8
337
337 rated 9
131
131 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
COPCONOCOPHILLIPS9
TAT&T Inc9
DVNDEVON ENERGY CORPORATION9
EOGEOG RESOURCES Inc9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.