Netflix is faced with increasing competition

Still, its stock price estimate implies a 60% premium to current market price.

By Trefis Jun 28, 2012 9:40AM
TrefisRecently, we wrote about increased competition for Netflix (NFLX) from Amazon (AMZN), and how that might impact it in the longer run (see Amazon Is About To Rain On Netflix's Parade With Original Content).

To add to that, Lovefilm has bagged an exclusive deal with News Corp's (NWS) Fox Studios to stream some movies to its customers in the U.K. that Netflix cannot. While competition seems to be increasing all around, customers are still willing to consider Netflix as one of their top choices in the U.S.


In a survey conducted by research firm Parks Associates, about 17% of respondents indicated they consider using Netflix over premium cable networks and about 16% think of Netflix as an alternative to on-demand video services.


While competition may be increasing, the survey results show considerable demand for Netflix in the U.S., which accounts for roughly 60% of our estimated $110 stock value.


The results, considering the sample size was appropriately chosen, indicate strong preference for Netflix even when premium networks and on-demand services are better equipped to provide newer content.


Netflix Stock Break-Up

Netflix appears to be surrounded by mixed developments that indicate the stock is unlikely to swing either way until the company shows some earnings that support its outlook.


Our price estimate for Netflix stands at about $110, implying a premium of over 60% to the market price.


More from Trefis

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.

114
114 rated 1
278
278 rated 2
474
474 rated 3
641
641 rated 4
639
639 rated 5
663
663 rated 6
640
640 rated 7
499
499 rated 8
284
284 rated 9
122
122 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
COPCONOCOPHILLIPS9
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
KOGKODIAK OIL & GAS Corp9
CVXCHEVRON CORPORATION8
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.