The new price target is the highest among Wall Street analysts, Bloomberg reported. Martin maintained her buy rating.
Roku recently traded at $269.79, up 2.53%, and has risen 81% year to date through Friday.
“We believe Covid-19 dramatically reallocated consumer spending during 2020, so the best question for 2021 is which economic shifts are durable and persistent?” Martin wrote in a commentary.
Roku benefits from long-term trends for connected TV, which means digital video ads shown on a TV screen, she said.
That includes “political ad spending upside; accelerated cord-cutting and 43 million streaming-only U.S. homes; more streaming devices per home; $7 billion more upfront advertising available to CTV; and demographic shifts that force advertisers to adopt CTV faster,” Martin said.
“Roku generates revenue from both AVOD [advertising-based video on demand] and SVOD [subscription video on demand],” she notes. That “implies it is hedged regardless of which companies win the streaming wars. We raise our estimates and price target because we believe Covid pulled forward by one to two years is a key upside value driver for Roku,” Martin said.
“The company should be valued as an aggregation platform, similar to iOS (AAPL) - Get Report and Android (GOOGL) - Get Report in mobile and (FB) - Get Report in social,” she said. “Winning platform aggregators typically benefit from winner-take-most economics, and walled gardens like Roku typically maximize value capture.”
Based on YouTube's revenue and valuation, “we believe Roku has material value upside,” Martin said.