Roku Paces Past 50M Active Users; Top Analyst Sticks To Buy

Roku has crossed a major milestone of 50 million active subscribers during the fourth quarter, according to preliminary figures.

The video streaming platform is scheduled to report its 4Q results in February. Following the update, Roku (ROKU) stock closed 2.3% higher on Wednesday.

Roku said that it expects to reach 51.2 million active subscribers in the fourth quarter, which is above analysts’ expectations of 50.3 million subscribers. The company said that its users streamed 17 billion hours during the fourth quarter, compared to the Street’s expectations of 16.3 billion streaming hours and 55% more than during the same period last year.

As for 2020, Roku saw an addition of 14 million subscribers in its active user base. Moreover, users streamed for about 58.7 billion hours during the year, reflecting an increase of 55% year-over-year.

In 3Q, Roku’s streaming hours totaled 14.8 billion. The company added 2.9 million active subscribers, ending the quarter with 46 million subscribers. Meanwhile, it reported 3Q earnings of $0.09 per share, versus analysts’ expectations for a loss of $0.42 per share. Its revenues of $452 million also exceeded the Street’s estimates of $369 million. (See ROKU stock analysis on TipRanks)

Following the preliminary numbers, Benchmark Co. analyst Daniel Kurnos maintained a Buy rating and a price target of $410 (19.6% upside potential) on the stock. In a note to investors, Kurnos said that Roku is one of his top picks for 2021 and he would buy the stock on any weakness.

Overall, the stock scores a cautiously optimistic outlook from the rest of the Street. The analyst consensus of a Moderate Buy is based on 12 Buys, 6 Holds and 1 Sell. In view of the 149.4% share rally over the past year, the average price target of $290.50 implies downside potential of about 15.3% to current levels.

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