Netflix is faced with increasing competition
Still, its stock price estimate implies a 60% premium to current market price.
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 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
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.
Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
VIDEO ON MSN MONEY
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.