Roku Rises as Vertical Group Is Bullish on Ad Spending Growth

Roku  (ROKU) - Get 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. 

“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.

Read More: How to Trade Roku With Earnings Out of the Way

“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.