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shares spiked Wednesday after Caris analyst David Miller upgraded the company to above average from average, and raised his price target to $6.50 from $5.

Miller believes that the stock price could continue to climb as company founder Hugh Hefner has the means to take the company private.

>>Hefner Bids to Take Playboy Private

In July, Hugh Hefner proposed to acquire all outstanding shares at a purchase price of $5.50 a share. Hefner, who founded Playboy Enterprises in 1957, currently owns 69.5% of the company's Class A stock and 27.7% of Class B stock.

Playboy went public in 1971, but circulation and revenue have been down in recent years. Hefner's proposed deal values the company at $185 million.

Miller says that Hefner is capable of paying $6.50 a share, which would be about a 28% premium over the current trading price of around $5.10.

"Reliable sources on the ground are telling us that, not only does Mr. Hefner's bid now have the necessary financing at $5.50, but that the financing in question could allow Mr. Hefner to raise his bid to $6.50, offering 28% upside from current levels," Miller said in his Dec. 22 research note.

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Miller said that the company will benefit from new its new Playboy-themed resort in London, which he expects will open in July 2011.

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

-- Written by Theresa McCabe in Boston.

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