Roku (ROKU) Stock Soared 5% Today – Here’s What You Need to Know
Shares of over-the-top streaming entertainment company Roku (NASDAQ:ROKU) climbed nearly 5% today, and there’s just one reason why: Yesterday evening, investment banker Oppenheimer announced a big upgrade on ROKU stock. The reason: From yesterday’s closing price of $43.29 a share, Oppenheimer believes the stock could rise nearly 18% over the next 12 months.
Lead analyst Jason Helfstein commented, “Following a 10% decline from its recent high, we are upgrading Roku from Perform to Outperform and establishing a $50 price target. We believe The Roku Channel is 0.63% of domestic time-spent on Roku’s platform or the 12th most-watched app by viewing hours, which represents a 9M hour monthly run-rate only nine months postlaunch. The rapid adoption of The Roku Channel gives us incremental confidence in the channel’s ability to garner viewership on other platforms, such as Samsung, allowing Roku to monetize a broader portion of the OTT ecosystem than we had previously assumed was possible. We value the core platform at $44/share and the off-platform Roku Channel opportunity at $7/share on a long-term DCF analysis, together implying 18% upside.”
“While we continue to see potential for average revenue per user (ARPU) to scale, revenue potential is limited by Roku’s ability to gain OTT viewership share; we are skeptical Roku can maintain greater than 20-25% share given the size and sophistication of its competitors. Using our market share assumption, we believe Roku’s Video Advertising TAM is $19B, of which it could capture 30-50% in gross profit dollars,” the analyst continued.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jason Helfstein has a yearly average return of 19.9% and a 68% success rate. Helfstein has a 18.8% average return when recommending ROKU, and is ranked #40 out of 4824 analysts.
Out of the 8 analysts polled in the past 12 months, 4 rate Roku stock a Buy, while 4 rate the stock a Hold. With a downside potential of 8%, the stock’s consensus target price stands at $41.86.