Thursday was a dim day for U.S. equities as gold climbed and the dollar suffered a setback. The S&P 500 Index lost 0.2%, the Dow Jones Industrial Average fell 0.1% and the Nasdaq Composite gained a fraction of a percentage.
As we head into a Friday that could be very low-volume due to St. Patrick’s Day colliding with the first round of the NCAA men’s basketball tournament, a few companies are still worth watching: They include Netflix, Inc. (NASDAQ:NFLX), Adobe Systems Incorporated (NASDAQ:ADBE) and Valeant Pharmaceuticals Intl Inc (NYSE:VRX).
Here’s what happened:
Netflix, Inc. (NFLX)
NFLX shares are actually off on Friday morning despite a humorous coverage initiation from Bernstein analyst Todd Juenger. Says Juenger:
“A wise investor once remarked to us: If Jesus were a stock, he’d be Netflix. You either believe or you don’t.”
The real reason to love Netflix stock right now, says Juenger, is that “streaming video-on-demand (SVOD)” will be “Very big.” That’s because it lowers cost of capital.
“The service can be priced at a steep discount (~90% lower ARPU) to incumbent video services in the U.S. (and with no advertising), partly because SVOD requires very little invested capital, but mostly because the incumbent TV networks are over-priced. They have been earning ROIC’s of 30-40% for decades because they were protected by the technological condition of linear, one-to-everybody simultaneous distribution.”
Juenger went on to say that the idea Netflix’s arena has no barriers to entry is silly, calling the company’s 100 million subscribers and $7 billion-plus annual content budget an “unassailable” barrier to entry. “Subs are hard to get,” he says.
Juenger started NFLX shares off at “Outperform” with a $178 price target — some 23% higher from current prices.
Valeant Pharmaceuticals Intl Inc (VRX)
VRX shares are on the rise thanks to, of all things, an activist investor.
ValueAct Capital Management raised its position on the pharmaceutical giant, according to a filing with the U.S. Securities and Exchange Commission. The hedge fund bought about 3 million shares of VRX stock, raising its position to 5.2%.
The firm paid about $10.88 apiece for the first 500,000 shares, while shelling out another $10.81 per share for another 2.5 million.