Netflix shares drop after "underperform" rating by Macquarie
Sept 17 (Reuters) - Netflix Inc (NFLX.O) shares fell 5 percent on Monday after Macquarie started covering the online streaming video company with an "underperform" rating.
Macquarie research analyst Tim Nollen put a $50 price target on the stock because media companies hold the upper hand. "In keeping with our positive thesis on media names like Time Warner and CBS, we believe content owners rule the roost; Netflix is a price taker in an increasingly competitive market," he wrote in the note.
Shares of Netflix fell $3.12 to $57.41.
The once-high flying Netflix stock, which at one point was trading at around $300, has hit several hurdles over the past year mainly over the cost of acquiring movies and TV series from media companies as well as stiff competition.
Content producers such as Time Warner Inc (TWX.N) and CBS Corp (CBS.N) are being courted by a slew of Netflix competitors like Apple Inc (AAPL.O), Google Inc (GOOG.O) and Amazon (AMZN.O), which are trying to lure people to their streaming video services.
In the latest example, studio partnership Epix struck a three year deal with Amazon. The news sent Netflix shares plummeting. Epix, the pay TV channel with more than 15,000 titles owned by Viacom Inc's (VIAB.O) Paramount Pictures, Metro-Goldwyn-Mayer Pictures and Lion's Gate Entertainment Corp (LGF.N) struck an exclusive agreement with Netflix in 2010 that ended in September. [ID:nL2E8K473V]
Nollen also cited weak subscriber growth, which is "trending below guidance" and the high cost of international expansion as reasons for the rating.
(Reporting By Jennifer Saba; Editing by Kenneth Barry)
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