Rosenblatt downgraded Netflix (NFLX) to Neutral from Buy with a price target of $105, down from $152, after the “surprise announcement” of a $83B EV and $72B equity value agreement to acquire Warner Bros.’ (WBD) studios and HBO businesses. Following the news, the firm sees an extended period of uncertainty and risks, balanced against what it calls “a very small financial ROIC that clearly can’t be driving this deal.” The deal instead “seems to lean heavily on the imponderables of leveraging Warner Bros.’ film and TV library in non-detailed ways,” which drives the firm to assume a more cautious multiple, the analyst tells investors.
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