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Internet television service Netflix ( NFLX ) could be approaching saturation in the U.S. and might face execution issues in its global rollout, FBR analyst Barton Crockett said in a report Friday. Crockett downgraded Netflix stock to market perform from outperform and cut his price target to 100 from 125. At the same time, he upgraded streaming music service Pandora Media ( P ) to outperform from market perform with a price target of 16. Pandora was down 12% at 8 on the stock market today after posting disappointing Q4 results on Thursday. Netflix stock was up 1.2% to above 87 Friday. It hit an all-time high of 133.27 on Dec. 7. Crockett listed three main risks for Netflix: Slowing U.S. growth, international execution risks and cash burn. Netflix has missed its own goals for U.S. subscriber additions for the last two quarters. In the December quarter, it added 1.56 million U.S. streaming subscribers, bringing its domestic total to 44.74 million. At the start of the quarter, Netflix was aiming for 1.65 million new U.S. streaming subscribers. “Slowing subscriber growth is possible if the U.S. market nears saturation,” Crockett said. “Another risk is competition from other streaming (video-on-demand) providers, including Amazon ( AMZN ) Prime and Hulu, which also offer services with subscription-based models.” On the international front, Netflix is ramping its subscription offering into markets with more than 300 million broadband homes. “As this continues, execution risks include competition, content misfires and broadband service interruptions,” he said. Then, there’s the issue of cash burn. Netflix’s spending has accelerated as it has increased its production of original movies and TV shows. It’s expected to run a negative cash flow this year and next, he said. “Netflix could seek to raise more debt financing for this cash burn, stoking investor concerns about cash burn,” Crockett said. RELATED: Who’s Courting Pandora Media: Apple, Amazon, Alphabet, Spotify? Netflix Stock Value Too Compelling To Pass Up, Piper Jaffray Says . Scalper1 News
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