Netflix, Inc.(NASDAQ:NFLX) has been upgraded to overweight from Equal Weight by Morgan Stanley, which has raised the price target to $85 a share.
The shares in the company rose on Friday after the upgrade and today the stock rose another 11.40% to $74.13, it’s 2-month high. Moreover, the stock has risen 32% in the past one week.
Morgan Stanley analyst Scott Devitt said that the threat t Netflix from competitors such as Aamazon has been over-estimated and has stated that the online retailer's streaming video service would not pose a serious threat to Netflix, which is an established player in the business.
“We believe the primary driver of content revaluation was Netflix’s own success,” he wrote in a research note. “Netflix is poised to leverage its domestic cost structure and potentially become the global video platform.”
Recently Citigroup did a survey and found that customer satisfaction with the services of Netflix has risen to 48 percent in the third quarter of 2012 compared to 45 percent in the first two quarters.
He added that Amazon.com, Inc.(NASDAQ:AMZN) was not likely to unbundle its Prime Instant Video from Amazon's Prime Shipping Service.
“Amazon.com’s strategy around Prime Instant Video is an adapted ‘freemium’ model,” he wrote.
“Prime customers receive free content and then supplement their viewing experience by renting movies from Amazon. This offering only works if Amazon.com keeps Prime Instant Video tethered to Prime. Once they offer a standalone product, they will face the Netflix content gap, which will cost an incremental $1.0-1.2B to close. We believe Amazon.com would rather invest that in other initiatives.”