With Roku (ROKU) share price up almost 250% over the past 12 months, and reaching an all-time high, it seems like an odd time for an analyst to suggest buying the stock.
But Needham analyst Laura Martin not only suggesting buying ROKU, she’s also hiking her 12-month price target from $60 to $85 a share, arguing that even at these prices, investors are underestimating future growth.
Investors who listened to Martin over the past year have made 22.9% on their Martin bets, according to TipRanks. The analyst has an impressive track record of 67% success rate and is ranked #83 out of 4881 analysts.
“Since going public, Roku has demonstrated: a) execution excellence; b) TAM expansion; c) moved from experimental to mainstream ad budgets; d) lowered its capital intensity and competitive risk; e) got lucky; and f) positioned itself as a key strategic OTT takeover target. NFLX is valued at 9.7x FY19E revenue and Roku at 9.1x. Both are OTT pure plays. We prefer Roku to NFLX owing to its better margins, lower content risk, event upside and better competitive profile (ie, Roku benefits from new OTT channels while NFLX competes for viewer time),” the analyst added.
Net net, TipRanks indicates Wall Street is split between a battle of bulls vs. fence sitters on this streaming device maker. Out of 7 analysts polled in the last 3 months, 4 are bullish on Roku stock, while 3 remain sidelined. However, is the stock overvalued or undervalued based on these analysts’ expectations? Consider that the 12-month average price target of $63.14 suggests a nearly 13% downside from today’s closing price. (See ROKU’s price targets and analyst ratings on TipRanks)