UPDATE: Morgan Stanley Downgrades Netflix, U.S. Digital Video Streaming to Grow Tighter in 2014

In a report published Tuesday, Morgan Stanley analyst Benjamin Swinburne downgraded

to Underweight from Equal-weight, lowering its base case from $333.00 to $310.00. According to the report, it is expected that competition in U.S. digital video streaming to grow tighter in 2014 as services like Amazon Prime Instant Video, HBO GO, and Hulu Plus offer compelling alternatives to NFLX's service and each could corner specific segments of the market. This could pose a challenge to NFLX's gross subscriber growth and lead to higher US marketing / content costs. “Even if Netflix's churn levels fall to record lows, we estimate that over 48MM out of 92MM residential broadband households (~53%) would need to watch Netflix over the next 12 months to meet our 2014E domestic sub forecast of 39MM,” the report said. “If monthly churn is closer Netflix's long-term average of ~4%, the number of households would need to reach ~52MM (~57%).” NFLX closed Monday at $359.57 with shares trading down at roughly 1 percent.