Market Overview

Ad Trends Are Shifting In Roku's Favor, Says Bullish Wells Fargo

Share:
Ad Trends Are Shifting In Roku's Favor, Says Bullish Wells Fargo

The bullish case for Roku Inc (NASDAQ: ROKU) is based on scale and advertising technology that should result in better-than-expected average revenue per user growth, according to Wells Fargo.

The Roku Analyst: Steven Cahall initiated coverage of Roku with an Overweight rating and $215 price target.

The Roku Thesis: Roku offers one of the better connected TV platforms in the market, as its neutral approach to streaming video platforms makes it easy for marketers to deploy ads, Cahall said in a Tuesday initiation note.

Marketers are mostly "impressed" with the ease of Roku's OneView analytics, the analyst said. 

The COVID-19 pandemic forced a shift in ad trends that works to Roku's benefit, he said, adding that marketers are now paying around 50% more per household reach today compared to 2010. 

Encouragingly, Roku has seen strong subscriber growth in the first half of 2020, and this puts the company in a position to command higher prices from advertisers, Cahall said. 

Roku's large scale for ad targeting and extremely valuable content are a game changer, the analyst said.

This should help Roku close the ARPU/month gap with rival Hulu, which generates around $8 in ARPU per month versus Roku's less than $2 a month, he said. 

If Roku shows a 15% compounded annual growth in ARPU/month, it will reach $3.60 by 2025, according to Wells Fargo. 

ROKU Price Action: Shares of Roku were trading higher by 5.51% at $168.72 at the time of publication Tuesday. 

Related Links:

Roku Rallies On Bullish Analyst Projection For 125M Subscribers

Roku's 'Stellar Quarter' Keeps These Analysts Pressing The Buy Button

Photo courtesy of Roku. 

Latest Ratings for ROKU

DateFirmActionFromTo
Oct 2020KeyBancDowngradesOverweightSector Weight
Oct 2020Deutsche BankMaintainsBuy
Oct 2020NeedhamMaintainsBuy

View More Analyst Ratings for ROKU
View the Latest Analyst Ratings

 

Related Articles (ROKU)

View Comments and Join the Discussion!

Posted-In: ads advertisingAnalyst Color Price Target Initiation Analyst Ratings Movers Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
INTCJP MorganMaintains70.0
STMCanaccord GenuityMaintains47.0
ELDeutsche BankMaintains248.0
UAADeutsche BankMaintains13.0
INTCDeutsche BankMaintains55.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com