Albert Fried Reiterates Underweight Rating, $68 PT on Netflix on Mixed Results

In a report published Monday, Albert Fried reiterated its Underweight rating and $68.00 price target on Netflix

. Albert Fried noted, “While NFLX's results were mixed versus our estimates, we underestimated the influence of low peer estimates to manufacture an earnings beat given NFLX's short interest. NFLX posted 2012A EPS of $0.29 per share as compared to our $0.27 per share estimate which was among the highest of our peers. Revenue and net sub additions in 2012A were $3.609 billion on 5.77 million additional subs as compared to our $3.614 billion and 6 million additions estimates for revenue and subscribers respectively. We expected a strong quarter for NFLX and we got one, however we still think NFLX's escalating content liabilities to $5.6 billion in 4Q12 from $5 billion in 3Q12 creates an earnings headwind and or potential shareholder dilution. On the upbeat earnings conference call CEO Reed Hastings suggested the company would refinance $200 million of its current debt and perhaps raise additional funds. We estimate NFLX has approximately $3 billion in content liabilities due over the next 24 months. And we expect NFLX will need to raise at least $1.4 billion to meet its current content obligations and also refinance its debt while keeping approximately $200 million in cash on its balance sheet to meet working capital needs.” Netflix closed on Friday at $181.04.