Shares of Roku (NASDAQ:ROKU) jumped over 20% today after the streaming device maker reported second-quarter results that topped Wall Street’s expectations. Those results were impressive, with Roku showing continued growth in all major metrics from active accounts to revenue. The growth was largely driven by outperformance in the Player segment as well as the Platform segment. Moreover, Roku issued solid guidance for the third-quarter while boosting its forecast for the year. Last but not least, the company announced the availability of The Roku Channel (TRC) on web and mobile as a free service, with similar content to Roku hardware platform.
However, RBC’s top analyst Mark Mahaney remains sidelined on ROKU, reiterating a Sector Perform rating on the stock, with a price target of $48, which represents a potential downside of 16% from where the stock is currently trading.
Mahaney explained, “We believe valuation is arguably full at these levels. Nevertheless, 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 for at least the near-term.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Mahaney has a yearly average return of 25.7% and a 74% success rate. Mahaney is ranked #17 out of 4850 analysts.
This streaming giant certainly has the Street divided. Based on 6 analysts polled in the last 3 months, 3 rate a Buy on ROKU stock, while 3 remain sidelined. The 12-month average price target stands at $53.67, marking a nearly 6% downside from where the stock is currently trading.