Citi Upgrades Netflix on Blockbuster's Price Increase

Blockbuster (BBI) Thursday has raised prices for some subscription plans. That’s not such good news if you are a Blockbuster customer, but it certainly is a welcome development for Netflix (NFLX) holders.

Blockbuster is raising prices for its Total Access service, which includes both rentals by mail and in stores, by $2-$10 a month, depending on the plan, according to Reuters.

On the news, Citigroup analyst Tony Wible upgraded shares of Netflix to Hold from Sell, asserting that the price increase “may create significant churn for BBI and benefit NFLX to the extent that it can capture new gross sub adds with relative ease.”

Wible says the move gives Netflix more flexibility to increase pricing while reducing subscriber acquisition costs. He is raising his EPS estimate for the March 2009 fiscal year to 98 cents from 92 cents. He maintains a Buy rating on BBI.

Netflix Thursday is up $2.24, or 9%, at $27.11. Blockbuster is up 4 cents at $3.54.

Comments

[borisb:]

is this the start of NFLX $2 eps?

2007 Dec 21 08:04 AM