Market Overview

KeyBanc Flips To The Roku Channel For A Happy Narrative

KeyBanc Flips To The Roku Channel For A Happy Narrative
Related ROKU
80 Biggest Movers From Yesterday
What To Do With Roku's Stock Following 20% Sell-Off?
Crestwood Capital Management, L.P. Buys At Home Group Inc, Interactive Brokers Group Inc, Roku ... (GuruFocus)

Tech testimony in the Senate and fresh, Inc. (NASDAQ: AMZN) competition pressured Roku Inc (NASDAQ: ROKU) shares, but the video streamer quickly recovered — and one analyst said it could do better than merely bounce back.

The Rating

KeyBanc Capital Markets analyst Evan Wingren maintained an Overweight rating on Roku and increased the price target from $67 to $81.

The Thesis

The first two months of the quarter showed relatively stable year-over-year growth in Roku customers, with 59.4 percent against last quarter’s 60.5 percent. As the second-quarter rate accompanied 46-percent active account growth, third-quarter pacing may result in AAG beyond KeyBanc’s 38-percent estimate, Wingren said in a Monday note. (See his track record here.) 

During the same period, growth in virtual multichannel video programming distributors “slowed slightly, but remains robust," the analyst said. 

“Despite the deceleration, we believe that ad-supported adoption of streaming clearly continues to ramp above expectations,” Wingren said. “In fact, we believe vMVPD adoption has been significant enough to drive subscriber growth for the traditional media sector. This is a long-term bullish signal for Roku, as continued growth in ad supported streaming consumption will ultimately trickle down to the platform and The Roku Channel, in our view.”

Consumer search results reveal rising interest in The Roku Channel, which remains small relative to other streaming platforms, but could ramp as Roku acquires content and accelerates marketing, Wingren said. 

A new partnership with JVC is driving additional optimism, the analyst said; the electronics manufacturer will begin integrating Roku’s operating system in its TVs later this year.

“Although JVC is a small OEM, the continued roll-up of OEMs and more SKUs in the market represents another indicator that momentum of the platform is continuing, in our view." 

Price Action

Roku shares were trading up 2.77 percent to $70.57 at the time of publication Tuesday. 

Related Links:

Should Roku Investors Worry About Amazon's IMDB?

Sell-Side Bullish On Roku After Q2 Report

Photo courtesy of Roku. 

Latest Ratings for ROKU

Nov 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Nov 2018WedbushUpgradesNeutralOutperform
Oct 2018RBC CapitalUpgradesSector PerformOutperform

View More Analyst Ratings for ROKU
View the Latest Analyst Ratings

Posted-In: Evan Wingren KeyBanc Capital MarketsAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga


Related Articles (AMZN + ROKU)

View Comments and Join the Discussion!

Latest Ratings

AMTDMorgan StanleyUpgrades65.0
APOMorgan StanleyDowngrades34.0
CGMorgan StanleyDowngrades23.0
EIXEdward JonesDowngrades0.0
View the Latest Analytics Ratings
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.

Fast Money Picks For September 11

Mid-Morning Market Update: Markets Rise; Renesas To Acquire Integrated Device Technology For $6.7B