Market Overview

Should Roku Investors Worry About Amazon's IMDB?

Share:
Should Roku Investors Worry About Amazon's IMDB?
Related AMZN
Positive Vibes: Bank Results Shift Focus Back To Earnings as Overseas Stocks Rise
Kudlow, Others Weigh In On Fed's Independence After Trump's 'Loco' Remark
Walgreens: High Yielder (Seeking Alpha)
Related ROKU
41 Biggest Movers From Yesterday
41 Stocks Moving In Wednesday's Mid-Day Session

Should Roku Inc (NASDAQ: ROKU) be concerned with reports Amazon.com, Inc. (NASDAQ: AMZN)'s Internet Movie Database subsidiary may launch a rival streaming service? KeyBanc Capital Markets has a theory. 

The Analyst

KeyBanc Capital Markets' Evan Wingren maintained an Overweight rating on Roku with a $67 price target and a Sector Weight rating on Amazon with no assigned price target. 

The Thesis

The Information reported Tuesday that Amazon is exploring a free-to-use, advertising-supported video service that could be used on its Fire TV streaming video devices, Wingren said in a Wednesday note. (See the analyst's track record here.) 

At the very least, the report is a "headline negative" for Roku, although the TV streaming business is large enough for both Roku and IMDB to be successful, the analyst said. 

Roku's ad business is estimated at around $200 million over the past year, while the linear TV ad business in the U.S. alone is more than $70 billion and more than $200 billion globally, Wingren said. Roku's stock is priced at 13 times 2019 EV/GP, which implies it doesn't have a dominant market share, he said.

Reports of competition from IMDB would have been an issue for Roku investors if the stock was trading at a valuation that implied market dominance, the analyst said. 

IMDB can create a "very compelling value proposition" to advertisers and execute well on a new product, Wingren said. This makes Amazon a high-quality competitor to Roku, but "there is plenty of room" for both companies to co-exist and drive value, he said. 

Price Action 

Roku were trading lower by 3.84 percent Wednesday morning, while Amazon's stock was up 1.19 percent. 

Related Links:

Amazon, Best Buy Smart TV Partnership Hurts Roku

What Alexa On Amazon's Fire TV Means For Netflix, Roku, Spotify, Comcast

Photo courtesy of Roku. 

Latest Ratings for AMZN

DateFirmActionFromTo
Sep 2018Stifel NicolausMaintainsBuyBuy
Sep 2018JefferiesMaintainsBuyBuy
Sep 2018Wells FargoMaintainsOutperformOutperform

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

Posted-In: advertisingAnalyst Color Price Target Reiteration Top Stories Analyst Ratings Tech Media Best of Benzinga

 

Related Articles (AMZN + ROKU)

View Comments and Join the Discussion!
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Solid Extra-Base Hit From GDP Breaks Up Otherwise Dull Week On Street

10 Biggest Price Target Changes For Wednesday