Argus doesn’t share the same enthusiasm for Netflix, Inc. NFLX that made the stock the top performer in the S&P 500 in 2015. Following the company’s surprise announcement that it will now be available in 130 new countries around the world, Argus released a new report explaining why the next two years could be tough for Netflix.
“Costs associated with the ramp-up in original productions, content licensing, and international expansion are likely to pressure margins through 2016 and perhaps into 2017,” the firm writes. In addition, the success of Netflix’s streaming platform has lured a whole new wave of competition in the space, including Time Warner Inc TWX, Apple Inc. AAPL, Alphabet Inc GOOG and Comcast Corporation CMCSA.
Related Link: More Upside For Netflix Stock? Wall Street Reacts To 'Surprise' Global Announcement
Argus also points out that Netflix’s explosive 2015 has its stock now trading at a “significant premium” to competitors on both a current-year and forward-looking basis.
Argus maintains a Hold rating on Netflix.
Disclosure: the author holds no position in the stocks mentioned.
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