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Why Netflix has hit its peak: Strategists

Talking Numbers

This week, Talking Numbers looks at the best and the worst of 2013. Once again, we are looking at Netflix, only this time with an entirely different set of analysts who have another outlook on the company.

Out of all the companies in the market benchmark S&P 500 index, Netflix is far and away the best performing stock in 2013. In fact, its 307% year-to-date returns blows away the number two company, Micron Technology, by 54%. To put it in perspective, the S&P 500 is right now up "only" 29% and it's considered a great year for stocks.

While some analysts believe Netflix may have better days ahead, others believe it will be tougher for the stock to go much higher from here. Next year's return will likely be a victim of Netflix's own success, according to CNBC contributor Andrew Busch, editor and publisher of The Busch Update.

(Watch: Short focus investing themes for 2014)

"Netflix has hit its peak," says Busch. "When you have President Obama discuss it or mention it, you've hit the peak."
Busch believe the company made the right decision when it split off its DVD business from streaming video. At the time, the decision was considered unpopular, Busch points out, but it allowed the company to reinvent itself. And, so far, it's been a success.

"They've totally hit the cover off the ball in 2013," says Busch. "Mashable is calling them the breakout brand of 2013. So, they're really at the height of what they're doing."

But continuing such execution may be difficult, according to Busch.

"This thing's run so far so fast, it's almost impossible for them to keep up this pace," says Busch. "I wouldn't look to see that type of performance or anywhere near it for 2014."

Netflix's success also means it will draw competition in the US and abroad, says Busch.

(Watch: Internet 2014: Rise of the Things)

Jonathan Krinsky, Chief Market Technician at MKM Partners, agrees with Busch that a repeat performance is pretty much impossible in 2014.

"We're not going to get another 300% up move from this $375 level," says Krinsky, who notes his company's analyst has a price target for Netflix at $370."

"I don't think there's a ton of upside technically from this $375 level," says Krinskiy. "But, if we get that pullback to that $300 support, that's where we'd really want to be aggressive buyers on Netflix."

To see the rest of Busch's fundamental analysis and Krinsky's take on Netflix's charts, watch the video above.

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