Shares of Roku ( ROKU -8.72% ) have climbed as much as 5% to hit all-time highs today. A bearish Wall Street analyst increased his price target, and news of a new strain of COVID-19 that is circulating in the U.K. has spooked investors and boosted stay-at-home stocks.
Morgan Stanley increased its price target on Roku shares from $150 to $200 while reiterating an underweight (equivalent to a sell) rating. Analyst Benjamin Swinburne has been pessimistic regarding Roku, believing that investors are currently overestimating the ultimate size of the company's total addressable market.
While Roku has seen engagement soar on its video-streaming platform throughout the pandemic, Swinburne believes the stock's premium valuation compared to peers is unwarranted. The analyst had downgraded shares of Roku about a year ago (before the pandemic hit) due to concerns about decelerating revenue growth, and the stock has gained approximately 160% since then.
The price target adjustment comes a few days after Benchmark separately raised its price target from $300 to a Street-high $410, following the announcement that Roku had finally secured a distribution deal with AT&T's WarnerMedia for HBO Max.
A new mutated strain of COVID-19 that is even more infectious has rattled investors and overshadowed the positive news that Congress has agreed on a new $900 billion stimulus deal. While broad market indexes are experiencing volatility from the development, stay-at-home stocks that have benefited from the pandemic -- such as Roku -- are rising today.