Netflix shares hit four-year high

Yesterday, Piper Jaffray analyst Michael Olson raised Netflix’s price target to $40 a share from $36, saying the largest U.S. movie-rental service via mail is taking market share from Blockbuster’s Total Access online service while Blu-ray’s victory in the next-generation DVD war will boost sales and earnings. Olson said his analysis showed that Netflix traffic increased 18% in the last three months, while Blockbuster's dropped 6%. 

DVD by mail still accounts for less than 20% of the total rental market, and if Netflix can capture just 1percentage point more than anticipated, it will have a large effect on the company's earnings, Olson said.

Four days earlier, Cantor Fitzgerald analyst Derek Brown upgraded his rating on the stock to "buy" from "hold."

Since January, the company also has authorized $250 million in stock buybacks, or about 11% of its market value.

“Netflix is up because they are executing. They preannounced positively only seven weeks into the quarter, then announced an expanded share buyback, so it makes sense that people are comfortable with the story,” said Wedbush Morgan analyst Michael Pachter. “The site outage is pretty inconsequential.”

The average rating of the 13 analysts that cover Netflix is between a “buy” and a “hold,” according to Thomson Financial surveys.

Yesterday, Netflix’s site went down from about 7 a.m. to 6 p.m. PST. The site is up today.

“It was an unanticipated outage, and we corrected it as fast as we could,” said Netflix spokesman Steve Swasey today.