Netflix downgrades highlight engagement and YouTube concerns

Netflix shares have fallen sharply over the past year as analysts raised concerns about viewer engagement and competition from YouTube, prompting downgrades from HSBC and Wells Fargo. The analysts disagree with other market watchers about the company’s prospects, leaving the outlook contested rather than settled. HSBC analyst Mohammed Khallouf cut Netflix to Hold from Buy and lowered his price target to $76 from $96. He cited YouTube’s expanding presence on television screens and analyst-reported figures showing Netflix held 7.8% of U.S. TV viewing time in July. HSBC reported YouTube at a record 14.2%, up 0.8 percentage points from a year earlier, while Netflix’s share was down 1 percentage point. Khallouf said YouTube’s gains appeared to come amid weaker reception for Netflix’s original programming, and that a near-term engagement recovery looked unlikely. Wells Fargo analyst Steve Cahall had downgraded Netflix to Underweight from Equal Weight and cut his target to $57 from $80. He cited engagement trends and estimated that Netflix members watched an average of 1.