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StockBeat: Netflix Culling on Wall Street Continues as Aegis Cuts Outlook

Investing.com – Netflix (NASDAQ:NFLX) is expected to continue to sit on the content streaming throne, but analysts are cutting their outlook on the streaming giant on worries over a rise in competition from new entrants like Walt Disney (NYSE:DIS) and Apple (NASDAQ:AAPL).

Aegis on Tuesday become the latest firm on Wall Street to lower its outlook on Netflix (NASDAQ:NFLX), cutting its price target on the stock to $275 from $310, while maintaining its "hold" rating on the stock. Netflix was roughly flat on the day.

"We reduced both our near-term and longer-term sub estimates on Netflix following a 56 country-by-country look at both (daily active users) and (monthly active users), that showed usage weakness in several territories and less than stellar growth trends in others," Aegis said, according to Briefing.com. "The data suggest some level of maturation of growth for Netflix in several key markets such as the U.S., Canada, Brazil, the U.K, Germany and France, while growth looks healthy in Asia and (Middle East and Africa)."

The price cut comes just a day after Evercore slashed its price target on the stock to $300 from $380 on worries that rising competition could bring the company’s business model under scrutiny at a time when its net subscriber additions are expected to peak.

"With net subscriber additions potentially peaking this year, and ahead of a number of new Internet TV service launches from well-capitalized competitors over the coming months, questions about the company's business model now abound," Evercore wrote in note.

Disney is set to launch its Disney+ service on Nov. 12 and Apple TV Plus is slated for launch on Nov. 1. But some on Wall Street do not see the risk of Netflix losing its dominance.

“Our new forecasts imply they are going to respond to content cost acceleration by revving up their own content spend that will allow them to maintain their subscriber growth while pushing back profitability materially,” Pivotal Research Group said in a recent note.

“In the end our view is that very few players can (or will) keep up with these spend levels and that ultimately this will be a 2-horse race (NFLX and Disney) where both horses can win, with Amazon (NASDAQ:AMZN) on the periphery and there is a reasonable shot that AT&T (NYSE:T) will screw up HBO as a competitor,” Pivotal said.

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