Key points to remember
- Magnite shares rose sharply after Craig-Hallum reiterated its buy rating and raised its price target to $45 per share.
- Analyst Jason Kreyer believes that near-term opportunities and the acceleration of connected television (CTV) will drive Magnite’s financial results higher.
- The stock looks overbought judging by its relative strength index (RSI), but the overall trend remains higher as it continues to rally within a well-defined range price channel.
Craig-Hallum analyst Jason Kreyer cited confidence in near-term opportunities at Magnite and CTV’s acceleration this year as catalysts for the higher price target. Kreyer believes the company is well positioned to capitalize on CTV’s shift given its relationship with The Walt Disney Company (SAY), spend consolidation, direct-to-consumer (DTC) relationships, and an accelerated return on ad spend.
Notably, eMarketer believes that programmatic advertising on CTVs grew by more than 50% year-over-year to reach $6.73 billion in 2020 and could reach $8.7 billion in 2021. These growth rates could help to boost Magnite and many other companies in the CTV space, including pandemic success stories like Roku, Inc.. (YEAR).
From a technical standpoint, Magnite stock has extended its breakout to new highs within its rising price channel. The RSI moved further into overbought territory with a reading of 75.53, but the moving average convergence divergence (MACD) continued its uptrend after a crossover earlier this month.
Traders should watch for short-term consolidation in Magnite stock given the overbought RSI reading in its price channel. If the stock extends its move higher, traders could see movement towards the upper end of its price channel at $47.50. If the stock declines, traders could see a move towards the lower end of its price channel at $30.00, although that seems less likely to happen.
Consolidation in technical analysis refers to an asset oscillating between a well-defined pattern of trading levels. Consolidation is generally interpreted as market indecision, which ends when the price of the asset moves above or below the trading pattern. A consolidation pattern can be broken for several reasons, such as the publication of materially important information or the triggering of a succession of limit orders.
Magnite shares rose sharply after Craig-Hallum reiterated its buy rating and nearly doubled its price target to $45 per share. Given an overbought RSI reading, traders could see some consolidation in the upward price channel before the stock potentially moves to new highs.
The author does not hold any positions in the stocks mentioned, except through passively managed index funds.