Media giant Comcast Corporation CMCSA will begin offering internet customers a free over-the-top box set, but one Roku Inc ROKU analyst isn't worried about the new competitive landscape.
The Analyst
D.A. Davidson analyst Tom Forte maintained a Buy rating on Roku with an unchanged $185 price target.
The Thesis
Comcast's entry to the streaming video market comes with one notable concern, Forte said in a Thursday note. (See his track record here.)
Based on anecdotal experience and industry analysis, Comcast seldom, if ever, is seen as the "lowest cost provider" to the consumer, the analyst said.
In other words, the "free" cost of Comcast's new hardware device will be made up elsewhere through "hefty fees" for its connectivity, he said.
Investors looking for real value in the streaming landscape are much better off with a Roku device, Forte said.
"We recommend investors purchase shares and take advantage of yesterday's pull-back, down roughly 14% at the close."
Aside from Comcast, the streaming video industry is only in the "top of the third inning," as some of the world's largest tech giants like Apple Inc. AAPL and media behemoths likes Walt Disney Co DIS have yet to launch their products, the analyst said.
Price Action
Roku shares were up 1.81% at $132.18 at the time of publication Thursday.
Related Links:
How Facebook, Comcast Just Shook Up The Streaming Video Wars
Guggenheim: Roku Growth Story Has More Fuel
Photo courtesy of Comcast.
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