By Sam Boughedda
Investing.com — Netflix Inc (NASDAQ:NFLX) shares fell another 8% on Monday after Jefferies downgraded it to hold from buy.
Analyst Andrew Uerkwitz also trimmed the firm's price target on Netflix shares to $415 per share from the prior $737.
After weaker guidance on subscriber growth, the streaming company's stock took a 21.7% dive last Friday.
The Jefferies analyst told clients in a research note that their previous buy thesis was based on steady subscription growth and a low churn and international content advantage, which they felt would lead to operating leverage as content spend steadies around $21 billion.
"We are confident in being in the middle innings of streaming penetration, but now see it taking much longer adding uncertainty. On the adjacency front, we believe Netflix isn't moving fast enough," Uerkwitz said.
He added that the "best content slate we've seen is doing little to drive sub growth," and the United States and Canada "may go ex-growth this year."
Netflix's first quarter guidance, content consolidation and slowing subscriber growth at some competitors "may mean we could be entering a period of slowing content spend at Netflix and the broader industry."
While the analyst is cautious on the near term risks for Netflix, he explained that "with low churn, unique scale advantages, and strong library of content, Netflix is in a position to significantly increase FCF (free cash flow) with minimal sub adds via pricing, smaller/stable content budgets, and potentially leveraging catalog."