Since the company announced it would get rid of Qwikster, Netflix (NASDAQ:NFLX) was down for the second straight day, reaching a low of 9%. Now, Pacific Crest is slashing it’s estimates on the premise Netflix is suffering from “brand damage.” Conversely, Hudson Square Research is upgrading the video provider.
Despite a downgrade yesterday of Netflix from Wedbush Securities’ Michael Pachter, Pacific Crest believes an operating margin of 15% is achievable, and it implies a $4.5 billion valuation on the streaming business. This belief is due in part to a projected increase in the streaming subscriber base of 39 million subs by 2016.
“For next year, he [Pacific Crest] sees 12.2 million DVD subs in the U.S. market, down from a prior 12.4 million estimate, and 28.6 million streaming subscribers, down from a prior 29.3 million. He also sees 5.8 million international subscribers, which is unchanged from before. Hargreaves cut his EPS estimate to $6.26 from $6.57, below the consensus $6.44, and for 2013 he introduces an estimate of $8.17, below the consensus $8.22,” according to Barron’s.