Roku soars on fresh Wall Street upgrade
Roku stock (ROKU) climbed about 8% on Monday after Cannonball Research upgraded shares to Buy from Neutral, citing "more meaningful" upside to current fiscal 2024 estimates.
"Our thesis is not based on an expectation of an improvement in the advertising market trends. Instead, we assume a continuation of the trends we have seen since Q2 full-year 2022," Cannonball Research analyst Vasily Karasyov wrote in a note published on Sunday.
Platform revenue — which includes ad sales, revenue from distribution deals, and over-the-top streaming service The Roku Channel — is expected to total roughly $3.37 billion in fiscal 2024, according to consensus estimates compiled by Bloomberg.
Current 2024 sell-side projections are calling for a 17.5% boost in video advertising, which rebounded in the third quarter, coupled with a decline of 7.7% in distribution and media and entertainment (M&E) advertising.
"Both of these, in our view, leave room for upside provided the macro conditions don’t deteriorate noticeably," Karasyov said.
The analyst, who also pushed his price target to $116 a share, up from the prior $88, added the connected TV market is on track to grow about 16% in fiscal 2023 — with Roku continuing to be the market leader.
"Even before the likely beat, ROKU should outgrow the market by ~400 [basis points] this year," he said.
The upgrade comes after Roku reported strong fourth quarter guidance and pointed to further signs of recovery in its ad revenue.
The company, which has enacted a slew of cost-cutting measures including layoffs in an effort to bring down operating expenses, said it remains committed to positive adjusted EBITDA for full-year 2024, "with continued improvements after that."
Stock market news today: Rally pauses, but stocks still head for blowout month - Yahoo Finance
Read More
No comments:
Post a Comment