Tomahawk, WI 09/11/2014 (Basicsmedia) – Netflix, Inc. (NASDAQ:NFLX) stock has been on a tear and looks to have caught the attention of Robert Peck of SunTrust, who in an interview on CNBC reiterated a share price target of $525 on the stock.  The analyst also maintains a ‘Neutral’ rating.

Peck believes the giant video streaming company has the potential to clock a growth of 9% on the upside, but valuation concerns prompted the ‘Neutral’ rating instead of going all bullish. Peck arrived at the price target of $525 on Netflix, Inc. (NASDAQ:NFLX) by adding premiums to mature Media Companies that Netflix is currently competing with, on the space.

Peck also argues that Netflix, Inc. (NASDAQ:NFLX) could initiate a content acquisition in the future, which should spur further growth in the streaming business.

“[…] One of the things it has, both positive, as well as a risk, is the more they go out on the content you can have a ‘John Carter’ type of thing you can have Guardians of the Galaxy. You just don’t know. So I think as they move further along the region content side of things  as gauging there is always success for that,” said Mr. Peck.

Some of the challenges that Peck expects Netflix, Inc. (NASDAQ:NFLX) to face along the way in its video streaming business includes competition, especially from Amazon.com, Inc. (NASDAQ:AMZN) and Hulu as well as from other satellite and Telco operators. The cost of original content is also expected to increase with the entrance of more players into the space.

Expansion into other viable international markets remains another play for Netflix, Inc. (NASDAQ:NFLX) according to Peck, which should have a substantial amount of pressure on cash flow in the short term. Cash flow will be suppressed in this case as the company would be forced to pay more content licenses for each new country they pursue.

Growth of subscribers in the U.S has enabled Netflix, Inc. (NASDAQ:NFLX) enjoy impressive profit margins. Growth in subscription is also good for business as Netflix can increase the cost for advertisements to cause an increase in revenues.


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