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The 2 reasons why Netflix stock hit a record high

Netflix's share price hit a record high on Tuesday after the company confirmed plans to expand into Asia and an investment firm put a mega-bullish price target on the stock.

Shares in the online streaming service closed up 7.63 percent at $121.15. In pre-market trading, shares were up 1.2 percent at around $122.60.

Behind the surge were two factors.

The first came as analysts at Guggenheim Partners initiated coverage of Netflix with a "buy" rating and a price target of $160, 32 percent above the closing price on Tuesday. The $160 price target puts it above Pivotal Research's $155, Cowen's $150 and FBR Capital's $142.

Investment in original content, improving broadband speeds globally and international expansion will drive the company, according to Guggenheim analysts.

Netflix has been investing heavily in original programs and films such as "House of Cards" and "Grace and Frankie" and attracting big name stars in the process.

Source: House of Cards | Facebook

However, some investors are concerned that Netflix's huge spend on original programming – with global content spend set to hit $5 billion in 2016 – will spiral out of control.

But Michael Morris from Guggenheim Partners said he is taking a long-term view.

"In my mind, I think that that sort of near-term concern about this year's content spend is exactly what continues to create the opportunity," Morris told CNBC in a TV interview on Tuesday.

"This company's still in the very early stages of a great virtuous cycle where…they've really started to build the content advantage…they are using that funding to develop some of the most innovative, original and demanding content out there."

Asia launch

The other factor behind the share price surge on Tuesday was the confirmation that Netflix would be launching in Japan on September 2, its first foray into the potentially lucrative Asian market.

Netflix has been on an aggressive expansion drive outside of the U.S. and is set to launch in Spain, Italy and Portugal this year and China in 2016. It said it wants to being 200 countries by the end of 2016.

Morris said the expansion is another reason to be very bullish on the stock.

"This is a company that expects to have its global footprint completely rolled out next year. It's in less than 5 percent of broadband homes outside of the U.S. right now and that broadband market is currently four times bigger than the U.S. market and will continue to grow at a higher rate," Morris said.

"I just see a big runway."