Roku's 'Revenue Trends Continue To Deteriorate': 4 Analysts On Streaming Platform's Q3 Earnings

Zinger Key Points
  • Roku continues to grow investment spending while revenue trends deteriorate, one analyst says.
  • After macro headwinds subside, Roku’s user base could continue to grow globally, another analyst stated.

Roku Inc ROKU announced downbeat guidance Thursday, causing a massive sell-off in the stock. Here's what the Street has to say. 

Morgan Stanley On Roku

Analyst Benjamin Swinburne maintained an Underweight rating while reducing the price target from $50 to $45.

The company’s “revenue trends continue to deteriorate but investment spend continues to grow,” the analyst said in a note.

“While cyclical headwinds will eventually abate, visibility into the underlying earnings potential of this business remains low and in the distance,” he added.

Related Link: Roku Q3 Earnings: Streaming Platform Posts Revenue Beat, Stock Hammered On Outlook, Weak Advertising Comments

Rosenblatt Securities On Roku

Analyst Barton Crockett downgraded Roku from Buy to Neutral while slashing the price target from $100 to $51.

“Roku had guided for 3% sales growth in 3Q22 to $700M and instead delivered a 12% rise to $761M, one of the best top-line growth rates of publicly traded, ad-driven companies so far this quarter,” the analyst said. “Adj. EBITDA was guided for a loss of $(75)M. Roku only lost $(34)M.” 

While Roku “presents its gyrations as one with peers entering an ad recession,” some peers “are talking very differently and this uncertainty we believe warrants a step-aside,” he said. 

Check out other analyst stock ratings.

Needham On Roku

Analyst Laura Martin reiterated a Buy rating while lowering the price target from $95 to $65.

Roku delivered strong active account growth and “over-delivery of 3Q22 rev growth,” Martin said.

Yet the company’s fourth-quarter guidance, the CFO’s departure in 2023 after eight years with Roku and the weak macro trends are areas of concern, she said. 

Wedbush On Roku

Analyst Michael Pachter reaffirmed an Outperform rating with a $75 price target.

“Roku is facing various near-term challenges, but most notably is reduced variable advertising spending,” Pachter said in a note. “Inflationary pressure has impacted smart TV sales, but less than we had anticipated,” he said. 

“Looking ahead beyond macroeconomic headwinds, we expect Roku’s user base to continue to grow globally, with expanding premium ad-supported content, and superior targeting capabilities that make Roku a compelling outlet for brand advertisers,” the analyst further wrote.

ROKU Price Action: Shares of Roku were down 7.82% at $50.07 Thursday morning. 

Photo via Shutterstock. 

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Posted In: Analyst ColorEarningsEntertainmentNewsDowngradesPrice TargetReiterationTop StoriesAnalyst RatingsMoversTrading IdeasGeneralBarton CrockettBenjamin SwinburneLaura MartinMichael PachterMorgan StanleyNeedhamRosenblatt SecuritiesWedbush
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