Roku Inc’s (ROKU) Long-Term Value Creation Opportunity Just Won a New Bull

KeyBanc's Evan Wingren joined the conversation on ROKU from a bullish stance, betting on 27% in return potential for the stock.


Roku Inc (NASDAQ:ROKU) drew a vote of confidence in time for its first quarter earnings showcase out this time next week, with KeyBanc analyst Evan Wingren initiating bullish coverage on the tech player. It is the dawning of an era where internet video content is taking center stage- and Wingren is out cheering with a positive call for robust sales growth in Roku’s corner waiting between now and the end of 2019.

As such, the analyst initiates bullish coverage with an Overweight rating and a price target of $42, marking a 27% upside from current levels. (To watch Wingren’s track record, click here)

Throughout the course of 2018, Wingren spotlights both financial results as well as the guide as upcoming key share drivers in the near-term. For the long-term, Wingren sings the praises of a digital streaming platform he recognizes with the capacity to profit from a rising secular transition to streaming video. Already, Roku has captured an over 35% market share of the video streaming market, and the analyst anticipates the company can see revenue jump beyond 60% annually through this year and the next.

“Although the majority of streaming viewing has shifted to ad-free environments, we believe that ad-supported streaming will continue to see strong adoption over the long run and could provide a tailwind to Roku,” continues Wingren. Throughout five years’ time, the analyst highly anticipates international growth prospects for a company that has currently made big waves on the domestic front. The goal here is to make Roku’s platform the clear “first choice” viewing option, as the company has brought various new offerings to its slate, from Cheddar to ESPN+ to Disney’s subsidiary’s new subscription platform.

Bottom line, “We recommend buying ROKU. We see it as a unique platform play on the growth in long-form streaming video, with a strong competitive position and improving fundamentals,” contends Wingren, adding: “We believe its purpose-built TV operating system, OEM relationships, growing platform, and early content efforts set it up for long-term value creation as streaming video continues to see adoption globally.”

TipRanks indicates cautious optimism circles ROKU shares. Out of 7 analysts polled in the last 3 months, 3 rate a Buy on ROKU, 3 maintain a Hold, while 1 issues a Sell. With a healthy return potential of 24%, the stock’s consensus target price stands at $41.00.

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