UPDATE: Stifel Downgrades Netflix

Stifel downgraded Netflix, Inc. NFLX Tuesday from Buy to Hold with a $380 fair value estimate.

“We remain positive on Netflix’ longer-term international opportunity, but think 3Q:14 results were a sign that investors are still focused on domestic subscriber growth in the near term.

“As a result, we view risk / reward as balanced at current prices. We also view shares as more attractive in the low-$300 range until we gain more clarity on domestic subscriber growth trajectory, all else being equal,” according to analysts led by Scott Devitt.

Devitt noted three key debates: “1) What will Netflix’s near-term domestic subscriber trajectory look like, and what does this imply for long-term penetration? 2) How large can Netflix’s international subscriber base grow over the long term? 3) How will international expansion and the evolution of content on Netflix’s platform impact its cost structure over time?"

The analyst report concluded, “Despite our positive long-term outlook for Netflix, which is predicated on international success, we think investors will be focused on domestic subscriber growth in the near term as the Street digests the longer-term impact of recent U.S. subscriber growth. Netflix shares currently trade at 24x 2016E EV / EBITDA, while our fair value estimate of $380 represents a 25x 2016E EV / EBITDA.”

Netflix traded at $353.01 in the premarket, down 0.96 percent.