Netflix (NASDAQ:NFLX) was cut to Neutral from Buy at Seaport Research Partners on Tuesday, with the firm removing its price target for the stock.
Analysts at the firm explained the decision was made after NFLX shares rapidly achieved their recently increased $576 per share price target.
"Whether NFLX is priced for perfection or not, we wonder who is the incremental buyer, and what are they playing for?," the analysts said.
"We think at best, the high-incremental-margin (65%) scenario, using our Aggressive advertising case of 50% of subs taking the ad tier at current 7.6% TV time usage share going out to 2027, layered on top of our estimated unaffected share price value of ~$271 could imply ~6% of upside from here," they added.
Seaport also noted that much of the implied ad opportunity has lifted the streaming giant's valuation parameters far above the normal range.