Summary:

While upgrading Netflix’s stock rating to “neutral” from “sell,” Janney Montgomery Scott analyst Tony Wible said that slow-moving competition as well as studios’ “addiction” on licensing fees will benefit the subscription streaming service in the near term. As for the long-term, Wible’s still not a believer.

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Down more than 40 percent from the zenith of its first-quarter surge, Netflix stock is now an OK purchase.

So said Janney Montgomery Scott analyst Tony Wible to investors Monday, while upgrading the streaming-video company’s stock rating from “sell” to “neutral.” He also adjusted the fair value estimate for the stock to $67 from $70. (It was trading at $67.39 as of late Monday on the Nasdaq, down about 0.7 percent for the day.)

“We believe the risk/reward is more balanced after the recent sell-off and downward estimate revision,” Wible wrote in a note to investors.

Also read: For Netflix users, “catch-up” viewing has a catch

Notoriously bearish on Netflix, Wible still believes the company faces longterm survival questions. In the short term, however, the outlook isn’t too bad.

For one, Wible noted that TV Everywhere — the cable industry’s attempt to counteract subscription video-on-demand services like Netflix and Hulu by porting over pay TV content to digital devices — is moving at an “embarrassingly slow pace.”

Also read: Few cable users aware of TV Everywhere

Wible also believes Netflix’s pipeline to premium Hollywood content remains safe, even though content licensors like Viacom are seeing their traditional models negatively impacted by subscription streaming.

Also read: We’ve got hard data – Netflix really is killing Spongebob

In fact, referring to what he calls a “studio addiction” on Netflix, Wible described something of a vicious circle, whereby media companies see their ratings and ad revenue hurt by Netflix streaming, and respond by licensing even more content to the service.

Summing it all up, Wibled noted, “We are not changing our views on the longer-term outlook for the company tied to a slowdown in sub growth and the cannibalization of the high-margin DVD business. However, this is tempered in the near term by studio dependency, lack of competition, slower decline in DVD … and cost rationalization.”

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