Roku stock rallies after analyst recommends bears 'take profit' on short positions

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Shares of Roku Inc. ROKU, +3.29% rallied 1.2% in premarket trading Thursday, after Pivotal Research analyst Jeffrey Wlodarczak backed away from his bearish rating on the streaming platform for TV, citing a "properly balanced" risk-versus-reward profile following this year's selloff. He recommended bearish investors "take profit" on their short positions. The stock, which bounced 2.8% on Wednesday, had closed Tuesday at the lowest price since May 2019, after a year-to-date plunge of 72.1% amid reduced spending by consumers and advertisers. Wlodarczak raised his rating to hold from sell while keeping this stock price target at $60, which still implies 8.5% downside from Wednesday's closing price. "Against what we view as a more encouraging backdrop and a retrenchment in the valuation we no longer view ROKU as a fundamental short at current valuation levels and therefore increased our rating to hold," Wlodarczak wrote in a note to clients.