Netflix stock took a ride on Tuesday, initially falling after Needham downgraded the stock to “hold” from “buy” over fears that the company’s exposure to Europe could speed subscriber churn or slow subscriber growth. But the stock recovered on the news that Comcast will put the streaming service on the Comcast X1 set-top box.
No financial details about the deal were released, however it’s said to be similar to those Comcast has with Apple and Roku, according to Recode, which first reported the news.
The agreement means Comcast subscribers can stream Netflix through the Comcast X1 entertainment platform; the set-top box allows customers to access on-demand features, DVR and apps like Facebook or Pandora.
Zacks research service says the deal comes as a surprise given the public clashes the two companies have had over net neutrality; Netflix has accused Comcast of throttling Netflix content in favor of its own.
Nevertheless, Zacks states in a research note the deal enables “Comcast to better compete with its cable rivals as well as its cord-cutter enabling foes like Apple TV, Chromecast, and Roku, while Netflix will now be right in front of potentially millions of new customers.”
Netflix’s strengths such as its robust revenue growth, expanding profit margins and increase in net income, according to TheStreet Ratings. “However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.” Netflix ended the day up $1.24 to close at $97.91 a share.