The Netflix fans on Wall Street who’ve helped its stock price rise 500% over the last 12 months to hover around its all-time highs have two fantasies about the streaming service. Some imagine that it will grow into a popular haven for people who want to cut the cord with cable or satellite’s TV services, attracting upward of 50M subscribers — up from about 29M now. Others say that Netflix can make peace with distributors, leading them to offer it as another premium channel much like HBO. Possible? Perhaps. But Bernstein Research analyst Carlos Kirjner doesn’t buy either scenario. In a bracing report today he warns that Netflix is overpriced unless you believe that “we are indeed witnessing the beginning of a fundamental change in the TV business, which would be very detrimental to the [cable operators], and that they are not going to exercise their tremendous and in our view increasing market power to prevent that from happening.”

Cable operators don’t need Netflix: They already serve about two-thirds of wired broadband customers without it. And they can knock Netflix on its ass simply by making Internet customers pay for the number of bits they use each month — effectively raising prices for those who like to stream video. “Netflix bulls often dismiss this possibility by hoping that the FCC or perhaps the DoJ would intervene,” Kirjner says. But he calls that “highly unlikely” warning that “investment theses that depend on government agencies or legislative bodies to actually do something are bad theses (because it is just so hard to get anything done in government).” Meanwhile wireless broadband can’t help: The technology “will not support Netflix streaming at scale (certainly not to TV sets).”

Can’t cable and Netflix become partners? Investors became enthusiastic about the possibility last month when the UK’s Virgin Media agreed to put Netflix side-by-side with its cable channels by offering an app to the service for customers who use its set-top boxes from TiVo. But most operators will want to be paid to carry and market Netflix — especially if they believe its subscribers might shave outlays for other pay TV services —  Kirjner says. That could come to as much as $5 per subscriber per month. If Netflix agreed to forego that much “its [profit] margins would crash” meaning that its shares “would be hugely over valued at their current price.”

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The bottom line: It’s possible that Netflix could benefit from developments that “have extremely low probabilities to the point of being almost absurd.” And it’s possible that cable companies won’t “take advantage of their market power to prevent Netflix and [streaming video providers] in general to transform the TV business. We just think investors should not count on either.”