/roku-splash-screen-a-574218fb3df78c6bb0f17b30.jpg)
Roku, Inc. (ROKU) shares rose more than 2% during Monday’s pre-market session after Needham reiterated its Buy rating and raised its price target from $255 to $315 per share.
Key Takeaways
- Roku shares moved higher during Monday’s pre-market session after Needham reiterated its Buy rating and raised its price target to $315 per share.
- Analyst Laura Martin cited numerous catalysts in saying that Roku’s tailwinds extend beyond the reallocation in consumer spending due to COVID-19.
- The stock could see some near-term consolidation near the upper end of its price channel or a breakout from its price channel toward fresh highs.
Needham analyst Laura Martin believes that, while Roku has benefited from the reallocation of consumer spending in 2020 due to COVID-19, it could also benefit from connected TV trends over the long term. She cited an accelerating cord-cutting trend, the proliferation of streaming devices per home, the rise of upfront advertising on CTV, and the demographic shifts that are forcing advertisers to adopt CTV faster.
From a technical standpoint, the stock broke out from its prior highs during Friday’s session before extending those gains on Monday. The relative strength index (RSI) climbed closer to overbought levels with a reading of 66.40, but the moving average convergence divergence (MACD) resumed its bullish uptrend. These indicators suggest that the stock could see some consolidation in the near term before resuming its long-term trend higher.
Traders should watch for consolidation above trendline support levels of around $266.00 if the stock closes below that level during today’s session. If the stock breaks down, traders could see a move toward trendline support at $231.00 or the 50-day moving average at $211.44. If the stock breaks out, traders could see a move to fresh highs beyond its price channel, which would then become a key support trendline moving forward.
Consolidation in technical analysis refers to an asset oscillating between a well-defined pattern of trading levels. Consolidation is generally interpreted as market indecisiveness, which ends when the asset’s price moves above or below the trading pattern.
The Bottom Line
Roku shares opened higher during Monday’s session after Needham reiterated its Buy rating and raised its price target to $315 per share. While the stock extended its breakout from prior highs, traders should watch for some consolidation within its price channel, although a close above those levels could mark a fresh uptrend.
The author holds no position in the stock(s) mentioned except through passively managed index funds.
