Netflix Inc (NFLX)

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Netflix Rival Climbs on Heels of RBC Upgrade
By: Schaeffer's Investment Research | October 11, 2019

- ROKU had recently pulled back from its September highs
- ROKU stock remains heavily shorted

Shares of streaming service Roku Inc (NASDAQ:ROKU) are 7% higher at $124.62 this morning, with the company on the receiving end of an impressive upgrade out of RBC. The firm upgraded ROKU to "outperform" from "sector perform," and hiked its price target to $155 from $107. Analysts at RBC say Roku's valuation has become compelling, naming the Netflix rival as one of the better small-cap companies. Plus, multiple layers of revenue potential lie in wait for the stock, as streaming trends continue to generate new material for advertisement-based video on demand (AVOD) and subscription video on demand (SVOD).

ROKU is now on pace for its first close atop the 80-day moving average since Sept. 19, and now sports an impressive triple-digit year-to-date gain of 299%. Today's surge also puts the equity back on its way to its Sept. 9 record high of $176.55.

Coming into today, analysts were already looking optimistic. Nine of 15 firms sport a "buy" or "strong buy" rating, while the stock's average 12-month price target of $134.94 comes at a 16.2% premium to last night's closing perch at $116.13.

Meanwhile, short interest has taken a back seat, dropping 2.9% during the most recent reporting period. This accounts for more than 12% of the stock's total available float, indicating a continued exodus from short sellers could keep the wind at its back.

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