Morgan Stanley analyst Scott Devitt downgraded Netflix to underweight and lowered his price target to 310 from 333.
Netflix faces tougher competition from Amazon Prime Instant Video, Hulu Plus, HBO Go and other online video providers, said Devitt. Media giant Time Warner (TWX) owns HBO. Hulu's owners — 21st Century Fox (FOXA), Walt Disney (DIS) and Comcast (CMCSA), which doesn't have management control for regulatory reasons — took Hulu off the block this summer after exploring a sale.
"We expect the landscape for streaming video on demand (SVOD) services to grow increasingly competitive in 2014 as widespread distribution is much more easily attained and content owners become more willing to license their programming to SVOD providers," wrote Devitt. "We think services like Amazon Prime Instant Video, HBO GO and Hulu Plus offer compelling content catalogs and may represent viable alternatives to Netflix for some consumers."
He added: "With U.S. broadband households approaching 90 million this year and the proliferation of SVOD-optimized devices, the number of consumers able to stream high-quality video is rapidly increasing. However, given the number of people that used Netflix in the past 12 months will be approaching 50 million by the end of 2013, we think there is a longer runway for growth in competing SVOD services."
Read More At Investor's Business Daily: http://news.investors.com/technology/010714-685390-morgan-stanley-downgrades-netflix-on-slower-subscriber-growth.htm#ixzz2pjVJ9Ux6
Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook