Investors should take profits after Roku shares nearly tripled following its earnings report, according to a top Wall Street firm.

Morgan Stanley on Thursday lowered its rating to underweight from equal-weight for Roku shares, citing the company’s high valuation.

Roku posted third-quarter financial results on Nov. 8. Its share are up 194 percent through Wednesday since the report.

“Roku delivered stronger than expected 3Q results, showing impressive momentum in active account and engagement growth,” analyst Benjamin Swinburne wrote in a note to clients. “However, we think the market has overreacted, with shares up ~200% since results. Current valuation (>17x ’18E platform revs, assuming 1.5x fwd player sales) is hard to justify.”

Roku shares declined 6.75 percent in Thursday’s premarket session. Swinburne increased his Roku price target to $30 from $25, representing 46 percent downside to Wednesday’s close.

The analyst noted the top five channels out of 5,000 channels on Roku’s platform generated 70 percent of consumers time spent. He cited two of the top channels, Netflix and YouTube, do not generate “material” sales for the company.

“If market share on consumer time spent increasingly shifts towards these larger scale players (e.g. Netflix, YouTube) and away from the long-tail, we believe Roku’s monetization opportunity could be more limited than the stock is pricing in today,” he wrote. “Consumer shift to OTT delivery of video is clear and accelerating; while well positioned to benefit, Roku’s long-term earnings potential from this shift remains less clear.”

Roku declined to comment for this story.

— CNBC’s Michael Bloom contributed to this story.