What happened
Shares of Roku ( ROKU 8.22% ) climbed 8.2% on Tuesday, on positive analyst comments.
So what
Rosenblatt Securities analyst Barton Crockett gave Roku shares a buy rating. He sees the digital media platform’s share price surge to $188. If he’s right, shareholders could enjoy gains of around 60% from the current share price of nearly $117.
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Crockett noted that Roku’s share price suffered a sharp decline after hitting a 52-week high of $490.76 in late July. This matched the stock market‘s “nasty turn” against premium-priced growth stocks, according to Crockett. Roku’s Q4 revenue shortfall and weak 2022 sales forecast haven’t helped either.
That said, Crockett thinks the stock’s plunge presents investors with an intriguing buying opportunity. He argued that Roku is well positioned as a “gatekeeper” in the global shift from traditional TV platforms to streaming options. Thus, he expects the company to increase sales at a healthy pace in the coming year.
Now what
Crockett is correct that Roku is well positioned to benefit from the migration of ad dollars to streaming platforms. Its more than 60 million active customer accounts and nearly 20 billion hours of streaming in the fourth quarter alone make Roku a valuable advertising partner for marketers.
However, Roku faces increased competition from well-heeled rivals, including Amazon.co.uk, which launched new smart TVs in September. Roku’s ability to effectively compete with Amazon and other streaming giants will go a long way in determining whether its stock can meet Crockett’s lofty price predictions.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.
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