Loop Capital Downgrades Roku To Sell From Hold On 'Excessive' Valuation

Loop Capital analyst Alan Gould downgraded Roku (ROKU) to Sell from Hold with an unchanged price target of $45. The stock closed yesterday down 5%, or $3.40, to $70.72 and is trading down another 4% to $68.03 in the premarket.

Macquarie this morning also downgraded Roku. Gould says that while he recognizes stocks "can go from expensive to more expensive," he can no longer justify a Hold rating on Roku at this "excessive valuation." This view is corroborated by increased insider selling and the company filing to sell stock, the analyst tells investors in a research note.

Roku has appreciated 131% since December 31, which compares with 33% for Netflix (NFLX) and 11% for the S&P 500 Index, Gould points out. Further, he believes Roku is facing "substantial potential competition."