Netflix: Let's Stay Home and Watch a Movie
Goodbye, theater tickets. Hello, movie rentals.
Stifel Nicolaus analyst Scott Devitt this morning upped his rating on Netflix (NFLX) to Buy from Hold, setting a $25 target price. Devitt notes that the stock is off 40 percent since late September, a period in which the S&P 500 is off 25 percent.
“In the current economy,” he writes, “Netflix’s value-oriented offering stands out to us as a compelling alternative to more expensive entertainment alternatives.” Devitt notes that the average Netflix customer paid a base of $13.60 a month–$163.20 a year–for two-at-a-time unlimited DVD rentals. By contrast, he notes that a night at a “Ticketmaster event” for a family of four on average runs $240. Take a family of four to the movies and ply them popcorn and soda, and you’ll pay $70. “Due to its relative value, we believe the Netflix existing subscriber base may remain more stable in the downturn and new subscribers could improve once the initial shock of the past few months subsides.”