Advertisers are likely to continue shifting from linear TV to over-the-top on-demand, which is where Roku Inc ROKU has “dominant market share, a rapidly growing user base, and superior targeting capabilities,” according to Wedbush.
The Roku Analyst: Michael Pachter upgraded the rating for Roku from Neutral to Outperform, while maintaining the price target at $475.
The Roku Thesis: The current pace of Roku’s revenue growth appears sustainable, since the migration of advertising from linear TV to OTT has only just begun and the company’s international expansion is also in early stages, Pachter said in the upgrade note.
Roku could report its first-quarter revenues and EBITDA ahead of the Street estimates when it posts results on May 6 after market close, the analyst mentions.
“We expect Roku to maintain its FY:21 outlook for continued growth with moderate deceleration in 2H given tough comparisons,” he added.
“While Roku’s share price is likely to remain volatile as expectations are high against a rich valuation, we think the recent pullback provides an attractive entry-point,” Pachter wrote further.
ROKU Price Action: Shares of Roku had risen by 0.98% to $361.25 at the time of publication Thursday morning.
(Photo: Roku)
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