Roku Inc’s ROKU installed base has been growing rapidly amid COVID-19, suggesting upside to the third-quarter estimates, according to Needham.
The Roku Analyst: Laura Martin maintained a Buy rating on Roku, while raising the price target from $190 to $255.
The Roku Thesis: The rapid growth of Roku’s installed base should drive higher monetization as advertising budgets rise, Martin said in the report.
The analyst cited recent eMarketer data as indicating that Roku is poised to reach 80% of all Connected TV users by yearend.
“By implication, if any new OTT service wants to launch in the US, it must be distributed by Roku to be successful,” she wrote in the note.
See Also: How Disney+ Can Surpass Netflix, According To Dan Loeb
While noting Roku is the dominant AVOD platform in the U.S., Martin said AVOD had gained 600 basis points of market share at the expense of SVOD in the third quarter.
Martin further wrote that Roku’s devices were gaining market share.
“Streaming box/sticks are now in 57% of US homes in April 2020, up from 50% in April 2019…In April 2020, SmartTVs were in 51% of homes up from 43% of US homes in April 2019,” she said.
ROKU Price Action: Shares of Roku traded up 4.5% to $222 at the time of publication Thursday.
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