Internet television network Netflix is dealing with a bunch of near-term headwinds to its business, which led one analyst to cut his price target on Netflix stock on Friday.
Oppenheimer analyst Jason Helfstein reiterated his outperform rating on Netflix stock but slashed his price target to 470 from 515.
On the stock market today, Netflix stock slid 1.1% to close at 379.81.
Challenges facing the streaming video leader include the slower-than-expected ramp of its advertising business and a weak content slate. Netflix's content lineup also will be impacted by the ongoing Hollywood writer and actor strikes.
"We continue to believe investors are underestimating the long-term tailwinds to subscribers/revenue from paid sharing/advertising," Helfstein said in a note to clients. Netflix's subscriber growth recently has been fueled by the addition of a lower-cost, ad-supported service and a crackdown on unpaid account sharing.
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While user engagement with the Netflix service is holding steady, its number of big hit programs has trended lower, Helfstein said.
In the third quarter, Netflix had six shows that Oppenheimer qualified as hits, compared with 20 in the second quarter, he said.
However, hours viewed were 8.2 billion in the third quarter vs. 8.8 billion in the second quarter. That implies more "mid-level content success," Helfstein said.
Netflix stock has come under selling pressure since hitting a recent high of 453.45 on Sept. 5.
Last week at a conference, Netflix Chief Financial Officer Spence Neumann warned that operating margins will increase at a slower-than-expected pace. He also said Netflix will not see a near-term sales and earnings lift from its advertising-supported service levels.
On Sunday, Evercore ISI analyst Mark Mahaney maintained his outperform rating on Netflix stock but cut his price target to 500 from 550.
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