Strong 4Q For Netflix

Piper Jaffray has published a research report on Netflix, Inc. NFLX after the company reported 4Q data that showed an upside to Netflix's earnings. In the report, Piper Jaffray writes "Through all 3 months of Q4, average unique visitors to Blockbuster.com were down 28% y/y vs. Netflix.com traffic up 39%. This is not surprising as Blockbuster has de-emphasized its Total Access (DVD-by-mail) product in recent quarters and does not offer a streaming subscription product. While Netflix has benefited from Blockbuster's struggles, we see further store closures as more low-hanging fruit. These store closures are also benefiting Redbox's DVD kiosk business. In Q4, web traffic to Redbox.com was up 14% y/y, a deceleration from 40% y/y in Q3. Redbox.com web traffic captures new and existing users searching for kiosk locations on the site, and current users reserving a copy of a movie at a Redbox (reservations can be made at Redbox.com). We continue to believe that retail store closures will benefit both Netflix and Redbox, as DVD by mail and kiosk rentals gain share." Piper Jaffray maintains its Overweight rating and $217 price target. Netflix, Inc. closed yesterday at $187.88.