Shares of Roku (ROKU) are soaring — up 115% YTD — and now it’s time to see if some of the huge gains are justified. The streaming device maker will report first-quarter results on Wednesday after market close, and the expectations are heightened heading into the telltale report.
To help you prepare, here is what top analyst Mark Mahaney is expecting: “Based on our model-sensitivity work, we believe Street estimates for Q1 are reasonable, with an upwards bias. Further, we view current Street Q2 estimates as at least bracketable. We expect ROKU to at least reiterate its FY’19 guide, though we note that the Street is looking for 37% Rev. growth (above mid-point of guide) and $7MM in EBITDA (above the high-end of guidance of ($5) – $5M).”
Mahaney is modeling Q1:19 revenue of $188M, which is near the mid-point of management’s guidance of $185 -$190M and a tad below the Street at $190MM. His Adjusted EBITDA estimate of -$10.5M is slightly lower than the Street at $8.6M and at the higher-end of company guidance of -$12M to -$8M.
“Long term, we view ROKU as one of the best plays on ad-supported OTT. Roku is 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 and, of course, Revenue growth,” Mahaney concluded.
Mahaney reiterates an Outperfrom rating on Roku stock, with a $70 price target, which implies nearly 6% upside from current levels.
As always, we like to give credit where credit is due. According to TipRanks, Mahaney has a yearly average return of 25.3% and a 71% success rate. White has an average return of 20.2% when recommending Roku stock and is ranked #26 out of 5,192 analysts.
Overall, analysts seem to be divided on ROKU as 5 recommend buying, 5 recommend holding, and two recommend selling. The average 12-month price target between these 12 analysts is $64.18, suggesting a slight downside potential.