Streaming video hardware and software maker Roku Inc ROKU has benefited over the months from people spending their time at home and recent momentum can be sustained even after a vaccine is available to the public, according to BofA Securities.
The Roku Analyst: Ruplu Bhattacharya maintains a Buy rating on Roku's stock with a price target lifted from $260 to $310.
The Roku Thesis: The COVID-19 pandemic accelerated the ongoing shift away from linear TV towards over-the-top (OTT) viewership and this certainly benefited Roku as its "fundamentals remain strong," Bhattacharya wrote in a note. But even in a post-COVID reality, streaming hours should remain above pre-COVID levels as consumers saw first hand the advantages of streaming video.
Consumers have come to appreciate Roku's platform that offers more variety of content, freedom to choose their subscription offerings, and the ability to consume free content.
Related Link: 3 Roku Analysts Recap 'Stellar' Q3
On Roku's end, the ability to accurately gather customer data allows it to offer audience guarantees to ad buyers. Roku is also able to command a premium cost per mille (CPM).
Looking forward to 2021, Bhattacharya said Roku will focus on building out its international business by following a similar game plan that worked in the U.S. Most notably, Roku will focus on building scale, driving engagement, and then monetizing the platform. The company should be able to grow Ad-Supported Video on Demand (AVOD) viewership as well as Ad spend in markets like Canada, the United Kingdom, Germany, and Spain.
ROKU Price Action: Shares of Roku traded around $274.62 publication time.
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