Roku Rises as Vertical Group Is Bullish on Ad Spending Growth
Roku (ROKU) - Get Roku Inc. Report was higher Thursday after the streaming-device maker was the subject of a note from Vertical Group analysts, who said they were "incrementally positive" on the company.
That positivity is based on year-over-year advertising spending growth that was above expectations.
And that growth stemmed from an aggressive push among TV buyers to buy up as much over-the-top inventory as possible, the analysts said.
Analysts at Truist upgraded the stock to buy from hold on strong fundamentals.
The firm cut its share-price target to $367 from $480, however, reflecting the stock’s recent decline.
“We see upside to platform gross profit,” Truist analyst Matthew Thorton wrote in a commentary.
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“Our model is 4%/11%/4%/7% above consensus 1Q/2Q/2021/2022, similar for platform revenue and Ebitda,” the analyst wrote. He sees numbers in line with consensus for number of accounts and hours watched.
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“Catalysts could include TCL Roku TVs in UK/Brazil and progress with linear addressable,” Thornton said. Roku “could add low-hundreds-of-millions gross profit,” he said.
Roku shares dropped 13% in March after the company said it planned to sell up to $1 billion of shares in at-the-market offerings. The sale plan came after it said it agreed to buy Nielsen's Advanced Video Advertising business as part of its long-term plan to boost its digital-advertising revenue.
Roku has quadrupled over the past year amid investor enthusiasm for streaming-related companies and its surprise fourth-quarter profit.
At last check shares of the San Jose, Calif., company were up 2.8% to $334.76.
