PreMarket Prep Stock Of The Day: Roku

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

With so much going on in the news this week, analyst rating changes haven't been in focus.

A rating change in Roku Inc. ROKU has the issue moving higher in Thursday’s session and the price action instigated by that change makes it the PreMarket Prep Stock Of The Day.

Short-Term Technicals: Roku's stock blasted a new all-time high ($490.76) in July primarily fueled by rumors it may be acquired by Comcast CMCSA. With the deal never coming to fruition and the rotation out of high price-earnings growth stocks, Roku's stock was destroyed.

At this time, the low for the recent slide was made on Monday at $309.37. That low coincides with its May 18 low of $310.46. Just as the market has bounced off Monday’s lows, so has Roku, but not quite in a dramatic fashion.

As of Wednesday, the rally off that low was capped Tuesday at $328. However, it did post its highest close for the rebound on Wednesday at $324.77.

Guggenheim Upgrade: Before today's open, Guggenheim analyst Michael Morris upgraded Roku to Buy with a $395 price target, implying 21.6% upside.

Morris is expecting the connected television advertising marketplace to grow at a “rapid pace" and that the company could be a primary beneficiary. He's also optimistic about the company’s international expansion and potential for additional targeted marketing partnerships.

PreMarket Prep Take: When the issue was being covered on the show it was trading at the $335 area. Dennis Dick noted the issue has been “sleepy” and this may be the catalyst to get it “kick-started." He wasn't chasing at this level, but wasn't looking to short it either. Longer-term, he cited the issue of having room up to the $350 area.

The author of this article identified resistance ahead of that level and mentioned the trio of highs at the $343 area from earlier in the month.

The discussion on the issue from Thursday’s show can be found here:

Price Action: After a much higher open ($339.44 versus $324.77), it only railed another 16 cents to $339.60 and reversed course.

As of 1:35 p.m., the ensuing decline has found support well ahead of the top of Wednesday’s range ($326.04), as it made a low at $330.20. Since making that low, it has bounced back into the mid-$330 handle.