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Roku Price Target Set at Wall Street High by Rosenblatt

Roku’s video ads 'have considerably longer view rates than average digital,' a Rosenblatt analyst says, raising his price target on the stock.
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Roku's  (ROKU) - Get Roku Inc. Report price target was raised to a Wall-Street-high of $420 from $260 by a Rosenblatt Securities analyst, who cited the media-streaming platform's improving dynamics for average revenue per user.

Shares of the Los Gatos, Calif., company at last check were up 1.5% to $385.

Analyst Mark Zgutowicz wrote that since Roku’s video ads “have considerably longer view rates than average digital, its relative pricing carries a considerable premium” that is likely to continue, according to Bloomberg. 

The analyst comments came after Roku estimated it had 51.2 million active accounts in the fourth quarter, up by about 14 million in 2020. 

The company also reported an estimated 17 billion streaming hours in the fourth quarter for a total of 58.7 billion hours in 2020, an increase of 55% year over year for the quarter and the full year.

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The results also moved Needham analyst Laura Martin to raise her price target on Roku to $400 from $315, while keeping a buy rating on the shares. 

The analyst said the company has "won the streaming wars" thanks to its CTV focus, platform advantages, competitive moats, and execution excellence. She added that Roku should continue to take market share in 2021, according to the Fly.

On Tuesday, Wells Fargo analyst Steve Cahall affirmed an overweight rating on Roku while increasing his price target to $414 from $275. 

Wells Fargo estimated that active Roku accounts spent 3.7 hours a day on the platform, translating to about $1.79 in monthly ad average revenue per user. 

For 2021, the firm's base case expects viewing time to grow 10% to 12%. The firm also says valuing Roku is "more art than science," but the reports that Roku could purchase the content from the defunct Quibi digital television network strengthen its bullish stance.