Mike Lindell Media Corp (MLMC)

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asleep at the wheel? Netflix Unflustered by VOD Threat
Maya Roney, 12.15.05, 11:55 AM ET

NEW YORK - Piper Jaffray research analyst Safa Rashtchy maintained an "outperform" rating and $34 price target on Netflix in anticipation of a strong fiscal fourth quarter.

Netflix (nasdaq: NFLX - news - people ) shares have eroded over the last several days on concerns of competition from Video-on-Demand, but Rashtchy believes these suspicions are unwarranted, noting the sell-off represents a buying opportunity.

"The arguments about movie downloads are similarly overly optimistic and ignore the reality of consumer behavior," said the analyst. "We believe Netflix remains the most viable and attractive value proposition for renting movies."

While Video-on-Demand has been technically possible and available for several years, it has not garnered substantial usage because it is not cost effective for the content producers, Rashtchy explained.

Netflix saw unique visitors to its website increase 8% and 23% sequentially in October and November, respectively. Rashtchy called the uptick "very encouraging" and expects upside to his estimate for a 12% sequential increase in fiscal fourth-quarter traffic.