Netflix initiated with "buy"

09/29/03 - First Albany

NEW YORK, September 29 (New Ratings) – Analyst Youssef Squali of First Albany initiates coverage of Netflix, Inc (NFLX: NASDAQ) with a "buy" rating. The 12-month price objective is set to $42.

Shares of Netflix, a provider of online DVD subscription and rental services in the US, are currently trading at $33.42.

According to First Albany’s research note published this morning, Netflix’s subscription base and per unit costs improved in 2Q03 due to the successful implementation of its new business model. The company has pioneered the web-based DVD rental market and has a significant edge over its peers, the analyst says.

First Albany adds that Netflix is likely to grow at a healthy rate on account of a double-digit growth outlook for the DVD market till 2006. The analyst cites the risks pertaining to new technologies, increased competition from Blockbuster's Film Caddy and Walmart.com, and changes in the terms of content purchase as the areas of concern for Netflix.

The EPS estimates for 2003 and 2004 are $0.40 and $1.16, respectively. The P/E estimates for 2003 and 2004 are 83.6x and 28.8x, respectively.

First Albany initiates coverage of Netflix, Inc with a "buy" rating.