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Roku Eyes Longest-Ever Rally as Shares Return Near Record Levels

Roku Eyes Longest-Ever Rally as Shares Return Near Record Levels

(Bloomberg) -- Roku Inc. shares rose on Wednesday, with the video-streaming platform company on track for the longest rally ever, an advance that has returned it near record levels.

The stock gained as much as 2.4%, and was on track for its seventh straight positive session. According to data compiled by Bloomberg, closing in positive territory would make for the longest stretch of positive gains in the stock’s history. It has risen more than 15% over the stretch, and stands about 2% below a record close hit earlier this year.

Roku Eyes Longest-Ever Rally as Shares Return Near Record Levels

The July gains are just the latest leg up for Roku, which has surged over the past several months. The stock has nearly quadrupled since a December low -- up about 290% since then.

Those gains contributed to some weakness in the second half of June, with analysts citing concerns over valuation. RBC Capital Markets downgraded Roku to sector perform in early July, saying the stock appeared “less compelling” following the “fully justified” advance.

Currently, seven analysts recommend buying Roku while another seven have a hold rating on the stock, according to Bloomberg data. Two firms have sell ratings, while the average price target of $87 implies downside of about 16%.

The stock’s 2019 gains have been in large part fueled by growing optimism over growth in the category of streaming video. On Tuesday, AT&T Inc.’s WarnerMedia division announced a new streaming service, the latest example of expansion and development in the space.

Roku is expected to report its second-quarter results on August 7, according to a Bloomberg estimate. The consensus forecast is that it will report an adjusted loss of about 21 cents a share on revenue of $224.5 million, which would represent revenue growth of more than 43%. Earnings tend to be volatile for the company, with shares seeing a reaction of more than 20% following each of the past four reports.

To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Steven Fromm

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