UPDATE: SunTrust Initiates Coverage On Netlfix, Inc. On Valuation

SunTrust analyst Bob Peck Initiated coverage of Netflix, Inc. NFLX Wednesday with a Neutral rating and a $525 Price Target.

The firm still believes Netflix to be the dominant Internet streaming video service, but valuation concerns leads them to wait for a pullback in share prices before getting more bullish.

The firm also cited key risks/controversies:

• Competition: NFLX faces competition (for subscribers and for content) from other streaming services (Amazon,Hulu, Sky, Redbox), from cable, satellite, and telco operators
• Cost Of Content: With more streaming services (Amazon) now bidding for original content and for exclusive streaming video-on-demand (SVOD) rights on non-original content, we believe there could be upward pressure on NFLX content cost.
• Cash Flow: original content and international market expansion should continue to pressure cash flow in the intermediate term.
• Direct Peering: Large U.S. ISPs have been able to get NFLX to pay them to establish network direct connects to ensure satisfactory broadband performance to underlying NFLX subscribers

Shares of Netflix are up slightly (0.08 percent) at $481.08 in the premarket.