Why HBO Could Send Netflix Shares Up: Analyst

Tuesday, 26 Mar 2013 | 11:26 AM ET
Netflix Price Target Now $225: Analyst
Tuesday, 26 Mar 2013 | 10:12 AM ET
Andy Hargreaves, Pacific Crest Securities analyst, explains why he believes the company is poised to become the global leader in subscription streaming.

Netflix is poised to get a boost as competitors like Time Warner's HBO make moves to adopt an on-demand streaming model, an analyst told CNBC's "Squawk on the Street" on Tuesday.

(Read More: What'll Boost Netflix, Yahoo: Mahaney)

"We think that would be tremendously positive for Netflix and at the end of the day that certainly underlines our view here, which is we think there is a big paradigm shift," Pacific Crest's Andy Hargreaves said. "It's a big move from everything live to on-demand, ... and Netflix is essentially the best in the world, we think, at executing that model."

Pacific Crest raised its price target for Netflix to $225 and upgraded its rating to "outperform" on Tuesday. The firm improved its outlook because it sees Netflix's subscription base increasing from 43 million domestic subscribers to 46 million, Hargreaves said.

Subscription growth will be fueled by the low-cost of Netflix's service—which is about $8 per month— and the quality of its content, he said.

(Read More: Netflix Allows US Users to Connect Accounts to Facebook )

"The breadth of content and increasingly the quality of the content that they have is unmatched by other premium services. HBO obviously has tremendous quality, and we think Netflix is heading in that direction in the quality and it has more breadth," Hargreaves said.

Last week, HBO's chief executive Richard Plepler hinted that there is a possibility that the company would be open to selling its HBO Go streaming service to consumers who are not subscribed to a cable TV service, but are subscribed to broadband Internet, according to a Reuters report.

Currently, only HBO GO is only available to people who subscribe to a cable TV service and purchase HBO channels for a monthly fee. A move to expand the HBO service shows that Netflix is on the right track for the future of media, Hargreaves said.

"HBO kind of moving towards them I think is recognition that that model is the future of online viewing," he said.

  Price   Change %Change


Contact Technology


    Get the best of CNBC in your inbox

    › Learn More
  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.