Roku (ROKU) Stock: Needham’s Top Analyst Vs. Loop Capital and Macquarie


Roku Inc (ROKU) stock now trades around its average 52-week price target of $62.10. Could it soar higher? Depends who you ask.

Yesterday, the company suffered two downgrades from two research firms; Loop Capital Markets and Macquarie — sending the stock tumbling about 14%.

However, Needham’s top analyst Laura Martin was out pounding the table on Roku Thursday, reiterating a Buy rating while boosting her price target to $85 (from $65), which implies about 40% upside from current levels.

Who should you trust? According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, Martin has a yearly average return of 19.2% and a 63.5% success rate. Martin has a 21.8% average return when recommending ROKU, and is ranked #106 out of 5252 analysts.

Martin commented, “Roku remains our top pick for 2019 owing to: a) Roku is a platform company “arms dealer” that aggregates 5,000 third-party premium streaming video apps; b) At 27mm OTT users, every new streaming service (including DIS, T, and APPL) will sign contracts (including rev shares) that allow its new service to be viewed by Roku’s users, we believe; c) TV advertisers must follow viewers to sell new products, and about 10MM Roku’s users do not have linear TV, plus Roku’s ad demos skew young (ie, valuable); d) the Roku Channel aggregates the best content on Roku’s platform and gives Roku more control of ad units and 2x more economics (note: Roku owns no content); e) Rising barriers to entry as 50% of users now come from Roku TVs; f) international expansion; and g) Roku may be acquired. We believe that Roku’s 14% share price correction yesterday was overdone.”

All in all, ROKU has 5 bullish analysts in its corner over the last three months, 4 analysts playing it safe on the sidelines , and 1 bear who sees the stock a Sell. The 12-month average price target (from a pool of Street-wide expectations) showcase nearly 2% upside potential for the ‘Moderate Buy’ rated stock. (See ROKU’s price targets and analyst ratings on TipRanks).