Netflix Inc., the pioneering online video service, rose 7.6 percent to a new closing high after Guggenheim Securities recommended the stock with a price target of $160, the most of any analyst covering the company.
Netflix finished at $121.15 in New York. The stock was already the top performer in the Standard & Poor’s 500 Index and has gained 148 percent this year.
Michael Morris, a Guggenheim analyst, issued a buy recommendation Tuesday. His 12-month, $160 target reflects confidence in a stock that has climbed along with the video company’s subscriber base. Netflix reported more than 65 million users as of July, a 30 percent jump from a year earlier.
“Netflix is based on a sound concept: Utilize improvements in technology to better entertain consumers in an efficient manner at an attractive price,” Morris wrote. “The stock’s performance has been very strong over the past two years, yet at $48 billion in market capitalization, we still see a significant gap between equity value and ultimate intrinsic value of the service.”
Morris’s recommendation compares with an average 12-month price target of $114.46, based on 46 analysts’ projections compiled by Bloomberg. John Blackledge, at Cowen & Co., is the most accurate forecaster of Netflix shares, according to Bloomberg data, and has a price target of $150.
Netflix’s growth and spending on new TV shows and films has attracted the creative community in Hollywood. The company will continue to add customers at a steady rate as it expands into new territories, Morris wrote.
Los Gatos, California-based Netflix, which split 7-for-1 last month, will start service in Japan on Sept. 2, according to Asahi. It will introduce its service to more than 100 new countries next year, Chief Executive Officer Reed Hastings has said.