Today’s Market Wrap Up and a Glimpse Into Thursday

Stocks tumbled today in response to weaker than expected jobs data. The Dow Jones Industrial Average took the brunt of it, falling more than 300 points and shaving nearly 1% off its value. The S&P 500 was down half a percent while the Nasdaq managed to eke out fractional gains.

Investors were spooked by an ADP jobs report, which revealed that jobs are being added to the private sector at a slower pace than expected. In July, companies added 330,000 payrolls while economists were looking for something along the lines of 690,000. In addition, the outlook for the delta variant isn’t getting any better, and investors are watching and waiting to see if renewed lockdowns will be implemented.

Stocks to Watch

Uber shares are getting punished in extended hours, falling nearly 4% at last check. The ride-share company narrowed its Q2 loss to USD 509 million, but it was still steeper than Wall Street was expecting. Uber and Lyft are both facing driver constraints that have been exacerbated by the resurgence of the virus. On the bright side, Uber had record bookings while revenue grew twofold.

Robinhood shares rallied 50% during the regular session, and according to reports, it was retail investors driving the price higher. Fidelity reportedly had close to 10K buy orders by individual investors early in the session, far outpacing the second most in-demand stock at the broker, GM.

Shares Etsy, an e-commerce site for handcrafted items, dropped 13.5% in extended hours amid signs that the pandemic-fueled shopping boom is winding down. Etsy’s Q2 sales increased by a double-digit percentage but it was less robust than recent quarters. Meanwhile, the company’s Q3 revenue outlook came in below consensus estimates.

Roku’s stock fell more than 8% in the after-hours. The video-streaming hardware company’s Q2 results fell short of estimates as the opening of the economy cut into users’ streaming time. Roku had 55.1 million active users in the quarter across more than 17 billion hours of streaming. The company continues to operate in an uncertain environment while comps from the pandemic year will remain a challenge for the rest of 2021.

Look Ahead

Investors will be on pins and needles until Friday when the employment report for the month of July is released. In the interim, stock futures are barely moving in the after-hours on Wednesday evening, with the three major stock market indexes leaning toward green.

Roku Is Blasting Higher With Big Money

So, what’s Big Money? That’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Roku has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the stock trades is what points to more upside. As I’ll show you, the Big Money has been consistent in the shares for years.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all of the big money signals ROKU has made the last year.

The last few days has seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price. Red signals are showing big selling in the shares:

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Source: www.mapsignals.com, End of day data sourced by Tiingo.com

In 2021, the stock has steadily gained. In June alone, ROKU made 4 of these rare green signals. This came after a big selloff earlier this year when growth stocks were under pressure. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out a few technicals grabbing my attention:

  • YTD outperformance vs. market (+14.93% vs. SPY)
  • YTD outperformance vs. technology ETF (+17.59% vs. XLK)

Outperformance is huge for leading stocks.

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Roku has been growing revenues rapidly. Take a look:

  • 3-year sales growth rate (+51.45%)
  • 3-year earnings growth rate (-118.17%)

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, Roku has been a top-rated stock at my research firm, MAPsignals, multiple times the last few years. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

ROKU has been a constant Big Money favorite since 2019. And since its first appearance on this report, it’s up +391%:

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Source: www.mapsignals.com, End of day data sourced from Tiingo.com

I wouldn’t be surprised if Roku makes additional appearances in the years to come. Let’s tie this all together.

Roku continues to fire on all cylinders technically alongside growing sales. With many high-quality growth stocks beginning to breakout with Big Money, I like the long-term story of the stock.

The Bottom Line

The Roku rally could have further upside. Big money buying in the shares is signaling to take notice. Shares could be positioned for further upside. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.

Disclosure: the author holds no position in ROKU at the time of publication.

Learn more about the MAPsignals process here.

Disclaimer

Best ETFs For July 2021

That’s why I spend my time crafting portfolios chock full of outlier stocks. If you choose right, you’ll have enormous gains on your hands in the years to come.

Now, I pick my ETFs perhaps a bit differently than other people. I can find outlier ETFs by tracking the Big Money. But that alone isn’t enough: when I catalog the components and find outlier stocks underneath… that’s the winning recipe.

That’s how I found the best big-money ETFs for July.

First, I looked at all ETFs making Big Money signals by going to MAPsignals.com and scanning the Big Money ETF Buys and Sells chart. I looked for recent days with heavy buying (the bright blue spikes):

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Once I knew which ETFs Big Money was buying, then I wanted the best opportunities. Remember: ETFs are just baskets of stocks. MAPsignals specializes in scoring more than 6,000 stocks daily. Therefore, if I know which stocks make up the ETFs, I can apply the stock scores to the ETFs. Then I can rank them all strongest to weakest.

Once the ETFs were sorted, I noticed Real Estate funds at the top. That’s why this month the top ETF is IYR.

#1 IYR – iShares U.S. Real Estate ETF

As we can see- there was a lot of Big Money buying plowing into this ETF over the last year. It accelerated noticeably since February:

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IYR holds some great stocks. One fine example is PLD (Prologis, Inc.). Below are Big Money signals for PLD:

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#2 BOTZ – Global X Robotics & Artificial Intelligence ETF

A.I. and Robotics are undoubtedly a huge part of our future. Big Money thinks so too. Look at the buying of BOTZ over the last year below.

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One great example stock that BOTZ holds is Intuitive Surgical. They make the surgical robot called DaVinci. It allows remote surgery- a phenomenal technology.

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#3 VDE – Vanguard Energy Sector ETF

Energy was an unloved sector last year. But it’s having a sudden resurgence. Big Money has been buying VDE:

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VDE holds a bunch of great energy stocks. One such stock that has been a Big Money darling in the past is FANG which is seeing a rebirth:

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#4 LIT – Global X Lithium ETF

Like it or not, lithium is the power of the foreseeable future for EVs. Look at all that green last year:

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And LIT holds some great stocks. One of them is the best-known EV manufacturer which is very reliant on lithium: Tesla Inc.

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#5 ARKQ – ARK Industrial Innovation ETF

The media has recently heaped scorn upon Cathie Wood, CEO of ARK Invest after she was Wall Street’s darling last year. The proof is ultimately not in the headlines, but in the Big Money buying. Here we can see clearly that Big Money loved ARKQ last year. The question is: when we see selling (red) should we worry?

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The answer lies in which stocks the ETF holds. And ARKQ holds some great ones. One such outlier is Teradyne:

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Let’s summarize here: the top 3 ETFs (IYR, BOTZ, and VDE) for July score well in terms of MAPsignals’ scores. That means Big Money has been pouring into them:

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LIT and ARKQ however, rank lower on our list of ETFs. This is because of weak technicals. These weaker ETFs represent great potential bargains.

So, there we have the 5 best ETFs for July.

The Bottom Line

IYR, BOTZ, VDE, LIT, & ARKQ represent top ETFs for July 2021. Real Estate, Energy, and Robotics stocks have performed well lately, which should continue. Lithium has an interesting story too. Paying attention to the fundamental quality of ETF constituents is paramount.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds long positions in TER in managed accounts, but no positions in IYR, BOTZ, VDE, LIT, ARKQ, PLD, ISRG, FANG, or TSLA at the time of publication.

Charts Source: www.mapsignals.com, FactSet, End of day data sourced from Tiingo.com

Investment Research Disclaimer

Roku Shares Surge on Earnings, Guidance Beat

Roku shares jumped over 11% on Friday after the San Jose, California-based video-streaming device maker reported better-than-expected earnings in the first quarter and delivered strong guidance for the second quarter.

The company that manufactures a variety of digital media players for video streaming reported earnings per share in the first quarter of $0.54, beating the Wall Street consensus estimates of a loss of $0.12 per share.

The digital media hardware company said its revenue jumped 79% year-on-year to $574.18 million, coming in well above analysts’ expectations of $490.56 million. Roku forecasts revenue between $610 million to $620 million in the second quarter, beating the market consensus of $549.5 million.

Following the upbeat results, Roku shares jumped 11.5% to $317.0 on Friday. The stock fell over 4% so far this year.

Analyst Comments

Roku kicked off 2021 with a strong first quarter as revenue and operating income both handily beat FactSet consensus projections based on strong ad revenue growth. The firm only added 2.4 million accounts in the quarter, reaching 53.6 million, as the pandemic may have pulled forward some demand in 2020,” noted Neil Macker, senior equity analyst at Morningstar.

“However, streaming hours continued to expand to 18.3 billion, up another 1.4 billion hours sequentially and 6 billion versus the first quarter last year. We expect that the continued secular trend towards streaming will help drive growth in both streaming hours and revenue per user over the near term. We are maintaining our no-moat rating and our $170 fair value.”

Roku Stock Price Forecast

Twenty-three analysts who offered stock ratings for Roku in the last three months forecast the average price in 12 months of $457.64 with a high forecast of $560.00 and a low forecast of $300.00.

The average price target represents a 44.37% increase from the last price of $317.00. Of those 23 analysts, 19 rated “Buy”, three rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $300 with a high of $400 under a bull scenario and $150 under the worst-case scenario. The firm gave an “Underweight” rating on the video-streaming device maker’s stock.

“We believe the market is underestimating the competition on Platform active accounts in the US, as well as the time it takes for international expansion to scale. Active account growth has benefited strongly in the US from share gains at TCL, and sustained growth will require additional share gains or major new smart TV partners,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“We believe the market may be underestimating the ability to monetize strong streaming hours growth long term. Not all hours are equally valuable to Roku, and impressive hours growth reported by Roku is at least in part driven by ‘cable’ TV viewing benefit from MVPDs that are likely structurally less valuable to Roku than hours of long-tail publishers.”

Several other analysts have also updated their stock outlook. Keybanc lowered the target price to $460 from $518. Oppenheimer cut the price objective to $400 from $500. Benchmark slashed the stock price forecast to $550 from $600.

JPMorgan trimmed the target price to $500 from $525. Evercore ISI raised the price objective to $430 from $400. Pivotal Research slashed the target price to $350 from $400.

Check out FX Empire’s earnings calendar

U.S. Market Wrap and Forecast for Monday

Early buying pressure faded during Friday’s expiration session, dropping major indices into the red. WTI crude oil reversed, dropping below 60 as temperatures lifted above the freezing mark in Texas and southern states. The 30-year bond posted another monthly low, continuing the relentless rise in yields across short- and long-dated instruments. Gamestop Inc. (GME) hit a monthly low, forcing another batch of Reddit traders to look for a less stressful hobby.

Roku Rocks

Roku Inc. (ROKU) posted a Q4 2020 profit of $0.49 per-share, well above expectations for a $0.03 loss, lifting the streaming hardware provider to a three-day high. However, rich valuation weighed on buying interest, stalling price well below Tuesday’s all-time high at 486.72. Deere and Co. (DE) reported the second blowout quarter in a row, lifting the agricultural giant to an all-time high above 330. The stock rose more than 55% in 2020 and has added another 20% so far in 2021.

Russell-2000 index ignored blue chip selling pressure, lifting into the midpoint of the weekly trading range. This instrument has rallied 55% since September, carving one of the strongest small cap buying waves since the 1990s. Speculative fervor in the Reddit crowd is driving the upside, with SPACs acting as petri dishes for hundreds of start-up operations. Unfortunately, most small caps won’t succeed down the road due to roadblocks set up by trillion dollar mega-techs.

Post-Options Hangover Ahead

Discovery Inc. (DISCA) could provide early metrics on the paid streaming service it launched in January in Monday’s pre-market earnings release. Home Depot Inc. (HD) and Lowes Inc. (LOW) lead next week’s blue chip calendar, highlighting do-it-yourself income during the pandemic’s second wave. The bubble in mall anchors could break after department stores release miserable quarterly results, which should confirm the slow bleed of long-term customers.

Consumer confidence and durable goods head next week’s economic calendar, along with new home sales. Millennials have entered their nesting stages, scooping up the limited supply of existing homes and driving prices to all-time highs. The supply crunch is forcing many nest builders to take advantage of remote work opportunities and build homes far away from west coast and northeast urban centers, in a phenomenon that will alter US demographics for decades.

For a look at all of today’s economic events, check out our economic calendar.

Roku Tops Q4 Earnings Estimates; Provides Upbeat Guidance

Roku, an American publicly-traded company that manufactures a variety of digital media players for video streaming, reported better-than-expected earnings in the holiday quarter with total active accounts rising 14.3 million in the year to 51.2 million.

San Jose, California-based video-streaming device maker said its total net revenue surged about 60% to $649.9 million, above the market expectations of $617.25 million. Adjusted profit came in at $0.49 per share, beating the Wall Street consensus estimates of $0.05 per share.

“There is often a degree of noise in ROKU‘s results mainly due to the revenue structure complexity in the Platform segment, which, in some quarters, masks strong core business results. We don’t see any noise this quarter and think the stock should react positively. Video advertising Y/Y growth accelerated to >100%; the commentary on the growth in SVOD subscription revenue stands out as an incremental positive,” said Vasily Karasyov, equity analyst at Cannonball Research.

However, Roku‘s shares, which surged nearly 150% last year, dipped about 1% to $452.99 on Thursday. The shares rose as high as 3% in extended trading.

The digital media hardware company forecasts total revenue in the range of $478 million and $493 million for the first quarter. That was higher than the market expectations of nearly $462 million.

Roku Stock Price Forecast

Sixteen analysts who offered stock ratings for Roku in the last three months forecast the average price in 12 months of $413.60 with a high forecast of $500.00 and a low forecast of $250.00.

The average price target represents a -8.70% decrease from the last price of $452.99. From those 16 analysts, ten rated “Buy”, five rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $275 with a high of $450 under a bull scenario and $150 under the worst-case scenario. The firm gave an “Underweight” rating on the video-streaming device maker’s stock.

Roku‘s Platform segment revenue growth benefited from both secular and COVID-19-related tailwinds. Gross margins a notable standout. Looking ahead, 1Q guidance is in-line and the company noted 2H deceleration likely. Remain ‘Underweight’ as valuation reflects success in our view,” said Benjamin Swinburne, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. Truist Securities raised the target price to $390 from $220. Deutsche Bank upped their price objective to $400 from $260 and gave the stock a buy rating.

Moreover, JP Morgan set an overweight rating and a $475 price objective. Zacks Investment Research gave a buy rating and set a $352 price target. Citigroup increased their price target to $460 from $375 and gave the company a buy rating.

Analyst Comments

“We believe the market is underestimating the competition on Platform active accounts in the U.S., as well as the time it takes for international expansion to scale. Active account growth has benefited strongly in the U.S. from share gains at TCL, and sustained growth will require additional share gains or major new smart TV partners,” Morgan Stanley’s Swinburne added.

“We believe the market may be underestimating the ability to monetize strong streaming hours growth long term. Not all hours are equally valuable to Roku, and impressive hours growth reported by Roku is at least in part driven by ‘cable’ TV viewing benefit from MVPDs that are likely structurally less valuable to Roku than hours of long-tail publishers.”

Upside and Downside Risks

Risks to Upside: Strong user adoption increases scale and leverage against content partners to secure greater advertising-supported content; international expansion can drive incremental advertising – highlighted by Morgan Stanley.

Risks to Downside: New product/feature launches by competitors could pressure Roku‘s account growth and time spent. Competitors could announce competing software licensing deals with smart TV manufacturers.

Check out FX Empire’s earnings calendar

Netflix Under Pressure Ahead of Tuesday Report

Netflix Inc. (NFLX) reports Q4 2020 earnings after Tuesday’s closing bell, with analysts looking for a profit of $1.41 per-share on $6.62 billion in revenue. If met, earnings-per-share (EPS) will mark a modest 8.4% profit increase, compared to the same quarter in 2020. Of course, all hell broke loose after that report, with a worldwide pandemic boosting subscriptions, especially in more resistant older demographics.

Netflix Growth Concerns

The stock posted an impressive 67% return in 2020 but hasn’t added a penny in the last six months and has lost 8% so far in 2021.  Rivals Walt Disney Co. (DIS) and Roku Inc. (ROKU) have ascended the leader board between then and now, with their rapidly-growing services attracting waves of Wall Street upgrades. On the flip side, growth concerns have plagued Netflix since July, with some analysts expecting 2021 to reveal all sorts of structural weaknesses.

That sentiment is far from universal, as evidenced by BMO Capital Market’s call to sell Disney. Analyst Daniel Salmon downgraded the stock to ‘Outperform’ in December, stating that Netflix “retakes the Top Pick mantle”. However, Needham’s Laura Martin is telling clients to sell NFLX and buy ROKU in a pairs trade that highlights a popular opposing view. She also expects DIS to have more subscribers within 18 to 24 months, given the service’s incredible ingrowth trajectory.

Wall Street and Technical Outlook

Wall Street consensus remains at a ‘Moderate Buy’ ahead of Tuesday’s confessional, based upon 19 ‘Buy’ and 7 ‘Hold’ recommendations. However, three analysts now recommend that subscribers close positions and move to the sidelines. Price targets currently range from a low of $235 to a Street-high $700 while the stock ended last week about $85 below the median $583 target. This humble placement raises the potential for a ‘buy-the-news’ reaction.

Netflix entered a broad rectangle pattern after posting the all-time high last summer and has now reversed at range resistance three times. However, it’s also held four tests at range support near 465, establishing a standoff that will end with one side getting trapped by an adverse trend. Monthly and weekly relative strength indicators are now entrenched in sell cycles, raising odds that committed sellers eventually take control of the tape.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Roku Hits All-Time High After Strong Metrics

Roku Inc. (ROKU) is trading at an all-time high on Thursday after Needham upgraded the stock, saying it has “won the streaming wars in the US”. The company just disclosed it finished the fourth quarter with 51.2 million accounts, up 5.2 million and 12% above estimates of 4.6 million, and up 14.3 million year-over-year. Customers also logged 17 billion streaming hours in the quarter, up 56% year-over-year and 6% above 16 billion estimates.

Wildly Successful Hardware

For the uninitiated, Roku came public in 2017, offering a set-top box for streaming entertainment unaffiliated with major providers, allowing the company to cut distribution deals and sell advertising. The hardware has grown enormously successful as streaming services have blossomed, with many customers wanting a single entity that handles all ‘channels’ to avoid convoluted hook-ups and endless button pressing on three or four remote controls.

Needham raised their target to $400 from $315, with analyst Laura Martin noting “investors often ask us to pick winners vs losers in the streaming space. What’s clear to us from 2020 is that ROKU has won the streaming wars in the US. Its CTV focus, platform competitive advantages, moats, and execution excellence all suggest to us that ROKU will continue to take market share in 2021. As a result, we raise our estimates for 4Q20, and FY21 and FY22”.

Wall Street and Technical Outlook

Wall Street consensus has grown more cautious after 2020’s phenomenal 247% return, with a ‘Moderate Buy’ rating based upon 12 ‘Buy’ and 6 ‘Hold’ recommendations. One analyst now recommends that shareholders sell positions and move to the sidelines. Price targets currently range from a low of $200 to a Street-high $414 while the stock opened Thursday’s US session more than $55 above the median $295 target. Investors continue to ignore this lofty placement.

A strong uptrend topped out at 176 in September 2019, giving way to a pullback that accelerated to an 11-month low during the pandemic decline. Speculators then realized folks worldwide were stuck at home, with nothing better to do than watch streaming entertainment, triggering an historic advance that mounted 2019 resistance in September. The stock has more than doubled in price since that time, making it one of the market’s strongest performers.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Roku Streams Higher After HBO Agreement

Roku, Inc. (ROKU) shares gained 4.37% in extended-hours trade Wednesday after the $41.36 billion digital media company announced it had reached an agreement with WarnerMedia to stream HBO Max content across its devices.

While Roku and WarnerMedia – a subsidiary of communications giant AT&T Inc. (T) – did not disclose specific details of the arrangement, both sides said that they were pleased to hash out a deal that had been on the table since May. The company hopes that the distribution of premium content on its platform will bolster its 46 million-strong active subscriber base and capture market share from Netflix, Walt Disney’s Disney+, and Comcast’s Peacock.

“We believe that all entertainment will be streamed, and we are thrilled to partner with HBO Max to bring their incredible library of iconic entertainment brands and blockbuster slate of direct to streaming theatrical releases to the Roku households with more than 100 million people that have made Roku the No. 1 TV streaming platform in America,” the company’s platform business manager Scott Rosenberg said, per Business Wire.

As of Dec. 17, 2020, Roku stock has surged 143.33% year to date (YTD), gaining around 40% in the past month alone. Like many streaming stocks, the company continues to benefit from people spending more time at home during the pandemic watching the latest blockbuster movies and hit television shows.

Wall Street View

Earlier this month, Citi’s Jason Bazinet bumped the investment bank’s price target on the stock to $375 from $220 while maintaining his ‘Buy’ recommendation. The analyst sees distribution agreements, such as the HBO Max deal, and expansion into international markets as a catalyst for further growth. Moreover, Bazinet places an enterprise value per active Roku account at $619, based on platform margins. Most other brokerages on the Street also have a bullish outlook on the stock. It receives 16 ‘Buy’ ratings, 9 ‘Hold’ rating, 1 ‘Underweight’ rating, and 1 ‘Sell’ rating.

Although several sell-side analysts had factored in an HBO Max carriage agreement, the stock may attract additional upgrades in the coming weeks due to the deal’s timing ahead of highly anticipated content like “Wonder Woman 1984,” which debuts on HBO Max and theaters Christmas Day.

Technical Outlook and Trading Tactics

After bouncing from support at $196 in early November, Roku shares have trended sharply higher. Although the stock is susceptible to a short-term correction, active traders should focus on playing upside momentum, remembering the old Wall Street adage – “the trend is your friend.” To deploy this strategy, consider using a fast period moving average, such as the 15-day SMA, as a trailing stop to let profits run. Simply exit the trade when the price closes below the indicator.

For a look at today’s earnings schedule, check out our earnings calendar.

Roku Pulling Back After Downgrade

Hot rocket Roku Inc. (ROKU) is trading lower by nearly 3% in Thursday’s U.S. session after a KeyBanc downgrade interrupted a torrid advance that’s added nearly 30% to the stock’s value since the Sept. 21 breakout. Sidelined investors are hoping for even more downside in coming sessions because a pullback into the breakout level could offer a low-risk buying opportunity, ahead of continued upside into 2021.

Roku Explosive Growth

The on-demand hardware provider has opened more than 43 million accounts, with the sizable base allowing them to charge higher-than-average advertising rates. The exodus from traditional broadcasting continues to take market share at a rapid pace, while Roku is perfectly positioned to benefit from this one-in-a-lifetime change in consumer behavior. It also plans to explore foreign markets next year, potentially setting up a fresh revenue stream. Even so, the lack of profitability quarter-to-quarter could rise to the top of investor concerns at any time.

KeyBanc Capital Markets analyst Justin Patterson downgraded Roku from ‘Overweight’ to ‘Sector Weight’ on Thursday, citing valuation concerns after shares have risen more than 50% in less than one month. He insists that “positive fundamentals appear reflected in share price”, along with other catalysts that have lifted the stock nearly 70% since the start of 2020. He also believes the company now “needs new catalysts to outperform”.

Wall Street And Technical Outlook

Wall Street consensus is growing more cautious due to outsized share gains, with a ‘Moderate Buy’ rating based upon 13 ‘Buy’ and 6 ‘Hold’ recommendations. Two analysts recommend that shareholders take profits and close their positions. Price targets currently range from a low of $65 to a street-high $255 while Roku is now trading just $28 below the high target. This lofty placement suggests higher price targets will be needed to sustain the upside.

The stock topped out in the 170s in 2019 and sold off nearly 120 points into the first quarter’s pandemic low at 58.22. It recovered those losses into July and broke out in September, posting strong volume that confirmed the breakout. Price action hit an all-time high at 239.14 earlier this week, ahead of two down days that haven’t affected highly-bullish technical readings. As a result, buying a pullback between 175 and the psychological 200 level looks like a smart choice.

For a look at all of today’s economic events, check out our economic calendar.

Roku Flies to All-Time High After Peacock Deal

Roku, Inc. (ROKU) shares surged 17.67% Monday after the streaming dongle-maker said it had entered into a carriage deal with Comcast’s subscription video-on-demand streaming service Peacock. The NBCUniversal subsidiary, which has more than 15 million users, offers paid tier services and free ad-supported access that provides Roku opportunities to grow its advertising revenue.

“We’re focused on delivering the kind of high-quality news and entertainment content Roku users want and love, and we’re excited to welcome Peacock’s world-class programming to America’s #1 TV streaming platform and help NBCUniversal build a bigger fan base through our industry-leading, audience development tools,” Roku’s vice president of content acquisition Tedd Cittadine said in a statement cited by Barron’s.

As of Sept. 22, 2020, Roku has a market capitalization of $24.16 billion and trades 41% higher year to date (YTD). Over the past three months alone, the stock has added 47%.

Advertising Revenue Boost

The agreement boosts Roku’s growing advertising revenues, with management saying the deal includes “a meaningful partnership around advertising.”  Although the companies didn’t disclose specific details about their ad-sharing arrangement, Roku has previously stated that it receives a 30% cut of ad revenues from the channels its platform carrries.

Wall Street View

Rosenblatt Securities analyst Mark Zgutowicz reiterated his buy rating on the stock and told clients that the deal – as well as providing advertising revenue – gives Roku bargaining power in its negotiations with WarnerMedia to carry its HBO Max service. “We expect an HBO Max deal inked (prior to) the onset of holiday season (TV) sales,” the analyst said.

Other research firms also remain bullish, with the stock receiving 17 ‘Buy’ ratings, and 5 ‘Hold’ ratings. Just two analysts recommend selling the shares. Twelve-month price targets range wildly on the Street from as high as $228 to as low as $65. The shares currently trade 10% above the average price target of $169.38.

Technical Outlook and Trading Tactics

Roku shares broke out of a two-month trading range Monday to set a new all-time high (ATH) after news of the Peacock deal surfaced. Furthermore, the move occurred on huge volume, indicating participating from larger market players. Also, the 50-day simple moving average (SMA) crossed up through the 200-day SMA in late July, a signal that typically marks the start of a new uptrend.

Breakout traders who buy at these levels should consider using the 50-day SMA as a trailing stop to let profits run as far as possible. To use this exit strategy, remain in the stock until price closes below the indicator. This would involve placing an initial stop-loss order just below $160.