Roku Has Been Called This Analyst's


 
 
02:06 12/27/2018

Los Gatos-based Roku saw its shares explode on Wednesday to close up almost 12% as traders cheered an analyst's bullish remarks on the company.

Shares had soared already 6% in pre-market trading when Wall Street learned that Needham financial analyst Laura Martin has called Roku her "top pick for 2019."

According to Martin, growth in over-the-top services, a strong strategic position, scale, demographic reach, a brand advertising adoption and a U.S. focus are all positives for the streaming device maker.

She noted that the company reached 24 million unique active accounts in the third quarter, marking a 43% increase from the year-earlier period.

"Engagement lengths are highly correlated to revenue and Roku now commands nearly 3 hours/day/household of users' viewing," Martin wrote.

She also noted that about 10% of U.S. TV viewers age 18 to 34 are now on Roku and 10 million of its users do not have a linear TV bundles, meaning advertisers can only reach them by buying Roku ads. Roku is becoming broadly accepted by the largest TV ecosystem companies as an integral part of the future of streaming and OTT services.

"The best way for an advertiser to reach these consumers is to buy ads on Roku," she said. "As viewers cut the cord, advertisers must follow viewers to platforms where they spend time."

Martin also said, "Roku is becoming broadly accepted by large TV ecosystem companies as an integral cog in the streaming/OTT future."

The analyst also believes that Roku could be an acquisition target. Martin rates Roku a "buy" and has a $45 price target on the stock.

Not long ago KeyBanc analysts also recommended the stock and wrote, "Roku has corrected from trading at a premium to its peer group to a discount, despite consensus estimates moving higher post 3Q earnings. This sell-off (outside of the tech-pocalypse) has been driven by a smaller and lumpy component of the platform business, and noise around its TCL partnership, both of which we view as overdone.” Despite these remarks, the analysts also lowered their price target on the stock from $81 to $59.


This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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