Playboy Upgraded on Hefner's Purchasing Power

Dec 22, 2010 10:30 AM PST
NEW YORK — A financial analyst who tracts Playboy Enterprises Inc. said today that "patience pays off" and that shares of the company are expected to rise 25 percent.

Caris & Co. analyst David Miller said the company appears poised for growth as founder Hugh Hefner could have the funds to take the company private.

Miller said that there has been "go-private chatter" based on "reliable sources on the ground" that Hefner is capable of paying $6.50 per share.

Miller said that represents a 27 percent premium over the current trading price of $5.13.

Hefner, Playboy's largest shareholder, offered last summer to acquire any shares he didn't already own for $5.50.

But Playboy stock since has fallen almost 8 percent, making Hefner's takeover bid more attractive to investors.

Miller raised the rating on the company to "Above Average" from "Average," and the price target to $6.50 from $5.

Shares of Playboy spiked in early morning trading to $5.24, but have since leveled out and are trading around $5.10.

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