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Guggenheim: Roku Growth Story Has More Fuel

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Guggenheim: Roku Growth Story Has More Fuel

The case for turning incrementally positive on streaming video hardware and software company Roku Inc (NASDAQ: ROKU) is based on its industry-leading platform and an attractive international growth opportunity, according to Guggenheim.

The Analyst

Michael Morris maintained a Buy rating on Roku's stock with a price target lifted from $119 to $170.

The Thesis

Roku will continue benefiting from the growth of streaming video, as it occupies a "rare position" of delivering a win-win-win-win arrangement with hardware manufacturers, consumers, content providers and advertisers, Morris said in a Wednesday note. (See his track record here.)

Roku's platform is able to satisfy each stakeholders' individual needs and is a key selling point for investors at a time when competition intensifies and Roku's stock valuation is elevated, the analyst said. 

Roku remains in the early innings of building out a global platform, he said. Most recently, the company announced an expanded partnership with Hisense to sell Roku-equipped TVs across Europe by the end of the year.

The company's strategy to focus on the global market is notable for three reasons, Morris said: 

  • The growth of streaming video globally will outpace the U.S. over the next five to 10 years.
  • Smart TV penetration outside of the U.S. remains low.
  • Roku is able to demonstrate its advantages to content providers and original equipment manufacturers and generate value for everyone.

Guggenheim's revised $170 price target is based on five times 2024 platform segment sales of $3.4 billion and values the international business at $6 billion.

Price Action

Roku shares were down 10.23% at $135.12 at the time of publication Wednesday. 

Related Links:

Roku CEO: Our Technology Should Be Included In Half Of TVs

Roku Leverages Recent Momentum With New Line Of Audio Devices

Photo courtesy of Roku. 

Latest Ratings for ROKU

DateFirmActionFromTo
Oct 2019UpgradesSector PerformOutperform
Oct 2019UpgradesNeutralOutperform
Sep 2019MaintainsOutperform

View More Analyst Ratings for ROKU
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Posted-In: Guggenheim Partners Hisense Michael Morris streaming videoAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

 

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