Roku, Inc. (ROKU) shares have soared about 30% over the past two sessions after analysts raised their price target on the stock. Needham increased its price target by 27% to $39.47, saying that Roku represents a pure play on over-the-top growth without content risk. The analyst also suggested that recent moves by The Walt Disney Company (DIS), Alphabet Inc. (GOOG) and Amazon.com, Inc. (AMZN) could help Roku and hurt Netflix, Inc. (NFLX).

Earlier this month, shares of Roku more than doubled after the company surpassed expectations in its third quarter financial results. Revenue rose 40.1% to $124.78 million – beating consensus estimates by $14.31 million – while net losses of 10 cents per share beat consensus estimates by 19 cents per share. Active accounts also increased nearly 50% to 16.7 million, and average revenue per user jumped 37% to $12.68. (See also: Roku: Needham Lifts Price Target as Stock Surges.)

Technical chart showing the performance of Roku, Inc. (ROKU) stock

From a technical standpoint, the stock recently broke out from its prior highs made earlier this month following its initial public offering back in late September. The relative strength index (RSI) appears overbought with a reading of 76.03, but the moving average convergence divergence (MACD) continues to trend higher. Strong volume over the past two sessions could indicate an acceleration of the stock's uptrend throughout this week.

Traders should watch for some near-term consolidation above the stock's prior highs given the lofty RSI reading. With strong underlying fundamentals, Roku shares could use these support levels as a starting point for a future rally higher after a period of rebuilding momentum. If the stock moves below these support levels, traders should watch for a move to retest R2 support at around $29.60, which is also the reaction high made in late September. (For more, see: Why Roku's Rocketing Stock May Flame Out.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

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