Analyst Targets 29% Upside for Roku Stock

KeyBanc said it's "buying Roku"

Roku Inc (NASDAQ:ROKU) is poised to buck today's bearish bias after KeyBanc started the stock with an "overweight" rating and $42 price target -- a 29% premium to last night's close at $32.54, and territory not charted since late February. The brokerage firm said it recommends "buying ROKU" because it's poised for "long-term creation value as streaming video continues to see adoption globally."

This upbeat outlook is helping offset an uninspiring "neutral" rating and $32 price target at D.A. Davidson, with ROKU stock trading up 1.4% at $33.00. More broadly, though, the shares have been trending lower since topping out at a record high of $58.80 last December -- down 44% -- and, outside of a brief mid-month pop, spent the majority of April churning in the $31-$32 neighborhood.

The security could be shaken out of this tight trading range after Roku reports earnings next Wednesday, May 9. Following the company's November report, the stock surged 54.9% in the subsequent session, while back in February, ROKU shares logged a single-session post-earnings loss of 17.7%.

Options traders appear to be positioning for a breakout. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 11,105 calls, compared to 4,427 puts. Considering 6.17 million ROKU shares are sold short -- a whopping 39.39% of the stock's float -- some of this recent call buying could be shorts hedging against upside risk.