Axiom Capital Says to Sell Netflix Now

Streaming media giant Netflix, Inc. (NASDAQ:NFLX) today caught some very bearish sentiment this morning from analysts at Axiom Capital.

The firm initiated coverage on NFLX with a Sell rating and $80 price target, suggesting an 18% downside to the stock’s Friday closing price of $97.58.

It’s not all bad news, though, as Axiom likes the company’s secular growth story, and admits Netflix is the clear leader in disrupting the tradition TV experience.

Axiom also lauded NFLX’s strong lineup of high-quality original content, as well as an excellent library of TV shows and movies (like the Disney deal).

However, Axiom says the confluence of rising competition, weakening pricing power, and sharply rising content costs are putting pressure on the company’s ability to meet long-term subscriber growth and profit estimates. Netflix’s valuation looks very rich from that perspective, and the company would have to execute flawlessly to justify it. Thus far, it hasn’t done so, and there’s little reason to believe it can turn things around any time soon.

NFLX-2016-08-29

Netflix shares fell $1.08 (-1.11%) to $96.50 in premarket trading Monday. NFLX has declined 15% since the start of 2016.

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