Bank of America: Netflix is Overvalued

Netflix Inc. (NASDAQ:NFLX) shares dipped more than 5 percent on Tuesday to $92.60 after Bank of America Merrill Lynch analysts dropped the stock’s rating to underperform from neutral.

The downgrade comes following stock appreciation of more than 40 percent since the beginning of the year. Analysts reasoned that investors may have been too confident about recent streaming service data. However, Netflix is still up more than 33 percent year-to-date.

BofA’s move comes one day after Netflix announced the launch of its streaming service for the U.K. and Ireland. The company is offering the service for 5.99 pounds/month in the U.K and 6.99 euro/month in Ireland, and has established a long list of content partners. Concerns exist about Netflix’s licensing costs, as well as competition from Amazon’s (NASDAQ:AMZN) Lovefilm subsidiary.

Here’s how Netflix shares are reacting to the downgrade:

Netflix, Inc. (NASDAQ:NFLX): NFLX shares recently traded at $94.70, down $3.48, or 3.54%. They have traded in a 52-week range of $62.37 to $304.79. Volume today was 16,890,584 shares versus a 3-month average volume of 8,842,050 shares. The company’s trailing P/E is 21.52, while trailing earnings are $4.40 per share.

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