Analyst Calls Netflix a 'Broken Story' as Stock Can get Hit With Wall Street Downgrades

NY - Netflix shares want to start well below the $100 mark Tuesday like a couple of Wall Street experts hit downgrades round the stock following worse-than-expected third-quarter customer deficits and forecasts for ongoing financial deficits.our editor indicates CBS, Netflix Sign Two-Year Content Agreement ICMs Chris Silbermann on New Network Chiefs, Netflixs Impact as well as the Very Worthwhile Pilot Season Susquehanna Financial analyst Vasily Karasyov downgraded the stock from "neutral" to "negative" and slashed his 12-month cost target from $124 to $60 in the note entitled "The Conclusion in the Road." PHOTOS: Netflix's 10 Most Leased Movies ever "Seems such as the nuclear winter scenario is playing out for Netflix," he written. "Subscriber base expansion inside the U.S. appears being minimal and deficits from worldwide launches are weighing on profitability. We feel third-quarter results combined with fourth-quarter guidance and comments on 2012 offer relaxation the bull situation on Netflix to be sure it." He added: "Netflix stock may be shifting within the momentum stock category into the broken story basket." Karasyov needs fourth-quarter U.S. internet customer addendums to decline eighty percent around-ago period, "implying total subscriber base growth and development of only 2 percent quarter-over-quarter, the slowest pace since the second quarter 2008." Which he added: "We're feeling the cruel trend will carry well into 2012 until a simple comp inside the third quarter breaks the pattern." PHOTOS: Hollywood's Finest Blunders Janney Montgomery Scott analyst Tony Wible also downgraded Netflix shares from "neutral" to "sell" again and cut his fair value estimate round the stock in 2 - from $102 to $51. "The completely new baseline of sub metrics is troubling, management credibility has crumbled, worldwide adoption is weak (after we suspected), content prices is mounting that is clearer the DVD business comprises concerning the huge the majority of profits," he written. "Management has not successful to rebuild belief inside the stock, that's still pricey and mispriced by value standards." Wible's primary point here: "We're feeling the Netflix model isn't sustainable, because the organization faces rising costs it wanted it could pass onto its subs, which appear reluctant to get this done.In . Among other analyst reactions, Lazard Capital Areas analyst Barton Crockett maintained his "neutral" rating on Netflix shares, but spoke from the "mega-totally totally reset" for that organization. Wedbush Opportunities analyst Michael Pachter also maintained his "neutral" stance, but cut his cost target from $110 to $82.50. Another-quarter outperformance in earnings was "overshadowed by customer attrition and weak 2012 earnings per share guidance from worldwide expansion" costs, he mentioned. Email: Georg.Szalai@thr.com Twitter: @georgszalai Related Subjects Netflix Reed Hastings