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Top Analyst Boosts Price Target on Roku Inc (ROKU), But Remains Sidelined; Here’s Why


The market has divided itself into two camps. The bulls argue that the worst is behind Roku Inc (NASDAQ:ROKU). The bears argue that the market is too optimistic about Roku’s recovery, which could take a long, long time. RBC Capital’s top analyst Mark Mahaney has found himself in the middle.

Mahaney reiterates a Sector Perform rating on Roku shares, while boosting the price target from $28 to $45.

The analyst wrote, “ROKU traded off 22% in after-market. Why? In Q3, ROKU Revenue came in 13% above Street & Platform Revenue Growth dramatically accelerated. In Q4, Revenue came in 3% above Street & Platform Revenue Growth modestly decelerated. Oh, and the stock was up about 100% in-between. That’s why (in our view). But fundamentally, Roku is still attacking a very large $70B TV Ad spend opportunity and as this spend migrates to over-the-top, we believe Roku can sustain robust growth in both Active Accounts and Total Hours Streamed, while improving monetization to drive material ARPU growth. Major concerns/ unknowns for us are device competition, potential TV OS competition, and uncertainty over how compelling the Roku value proposition is to advertisers and content channels. But we believe the market opportunity should support very robust growth for Roku at least near-term.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Mark Mahaney has a yearly average return of 22.4% and a 68% success rate. Mahaney has a average return when recommending ROKU, and is ranked #29 out of 4760 analysts.

This video streaming firm certainly has the Street divided, as TipRanks analytics indicate ROKU as a Hold. Based on 6 analysts polled by TipRanks in the past 12 months, 2 rate a Buy on the stock, 3 issue a Sell, while one recommends  a Sell.