NEW YORK (AP) — Netflix shares rose 5 percent Tuesday, as an analyst boosted the company's price target, citing the potential for more subscribers.
THE SPARK: Analyst Andy Hargreaves of Pacific Crest Securities increased his Netflix price target to $225 from $160 and kept an "Outperform" rating.
THE BACKGROUND: Although it still operates its shrinking DVD-by-mail rental service, Netflix Inc. is focused on home and mobile entertainment. The company's main subscription service now streams movies and TV shows to any device with a high-speed connection.
THE ANALYSIS: In a client note Hargreaves said that the company's database of subscriber viewing habits should help it figure out ways to invest in original content that will be the most effective and also assist it in buying third-party content that can appeal to a big audience.
The analyst estimates that Netflix's U.S. streaming video business will hit 36 million subscribers by the end of 2015 and draw 17 million subscribers overseas. Hargreaves called Netflix "the clear global leader in subscription streaming video."
SHARE ACTION: Netflix rose $8.99, or 5 percent, to $189.78 in midday trading. The stock has traded between $52.81 and $197.62 over the last year, hitting a 52-week high in February. The stock has nearly doubled year-to-date.