Bulls Blast ROKU After Lofty Needham Price-Target Hike

The equity has gained more than 154% in the last six months

Digital Content Manager
Nov 23, 2020 at 11:58 AM
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The shares of Roku Inc (NASDAQ:ROKU) are up 3.2% at $271.58 at last check, and earlier hit an all-time high of $275.88, after the video-streaming device maker received a price-target hike from Needham to a Street-high $315 from $255 this morning. The analyst in question said the tech company is benefitting from long-term upside trends, including political ad spending, accelerated cord-cutting and 43 million streaming-only U.S. homes, driven by stay-at-home orders during the pandemic.  

On the charts, the equity has been carving a channel of higher highs since September, more than quadrupling off a March 17, annual low of $58.22. What's more, the security's 50-day moving average has successfully contained a few pullbacks over the last couple of weeks. In the last six months, ROKU has gained 154.8%.

Analysts were mostly optimistic toward the equity coming into today, with 11 of the 19 in coverage sporting a "buy" or better rating, and the remaining eight carrying a tepid "hold" or worse. Meanwhile, the 12-month consensus target price of $244.81 is a hefty 11.7% discount to its current perch, indicating more price-target hikes may be on ROKU's horizon.

That optimism is echoed in the options pits, where calls are king. This is per the security's 10-day call/put volume ratio of 3.27 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 87% of readings from the past year. In simpler terms, calls are being picked up at a quicker-than-usual clip. 

Today's bull note is only reinforcing this upbeat sentiment. So far, 50,000 calls have crossed the tape, which is nearly twice the average intraday amount, and more than double the number of puts traded. The 11/27 280-strike call is the most popular, followed by the 275 strike-call in the same weekly series, with new positions currently being opened at both. In other words, investors expect to see continued upside for ROKU by the end of the week.

Lastly, the equity's Schaeffer's Volatility Scorecard (SVS) ranks relatively high at 72 out of 100, meaning ROKU has tended to exceed these expectations during the past year -- a boon for options buyers.

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