Barclays Maintains an 'Overweight' on Netflix (NFLX); Model Update

Barclays maintains an 'Overweight' on Netflix (NASDAQ: NFLX) price target lowered from $125 to $115.

Barclays analyst says, "Given our expectation for a higher run rate for content amortization costs than prior, we are reducing our FY'12 EPS to $0.96 from $2.06. And on account of these model changes, we are reducing our price target to $115, which is derived from a sum-of-the-parts analysis of the streaming, DVD, and international segments."

"Expect losses in 1H'12 as international ramps: We are modeling GAAP EPS losses of $0.33 and $0.10 in 1Q and 2Q, respectively, owing to escalating content amortization costs in the US, as well as launch costs in the UK and Ireland...Content spend to weigh on free cash flow: We expect cash spend on content deals, particularly for international territories, to remain elevated through 2012. As a result, we expect FCF to trend below net income through 3Q, and for FY'12 we are modeling FCF of $34M, a decline of 80% Y/Y."

For an analyst ratings summary and ratings history on Netflix click here. For more ratings news on Netflix click here.

Shares of Netflix closed at $76.46 yesterday.

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