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Roku Rises as Earnings Beat Sparks Analyst Price-Target Hikes

Roku rises after reporting fourth-quarter earnings that beat expectations, prompting at least two Wall Street analysts to raise their one-year price targets.

Roku  (ROKU)  shares rose Friday after the video-streaming platform company reported fourth-quarter earnings that beat expectations and gave an upbeat assessment of its future prospects, which in turn prompted at least two Wall Street analysts to raise their one-year price targets on the stock.

Roku shares were up 1.59% at $460.18 in premarket trading on Friday after the San Jose-based company reported a surprise fourth-quarter profit as its streaming platform surpassed 51 million active accounts.

Roku posted earnings of 53 cents a share, or 49 cents a share on an adjusted basis, on revenue of $649.9 million, a 58% year-over-year increase. Analysts were expecting an adjusted loss of 5 cents a share on revenue of $617.7 million.

Analysts were broadly positive on the report, with several firms raising their price targets, although some taking a more cautious tone on the stock’s valuation.

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Benchmark analysts called the results a “consummate proof-of-concept quarter for the advertising and distribution platform thesis,” noting that other than concerns over valuation and consensus expectations, “… we do not see any major obstacles ahead of this rocket ship.” 

The firm raised its price target on the stock to $600 from $410 and kept its buy rating.

Pivot Research, meantime, wrote in a research note that Roku’s results were strong and its outlook was better than expected, though also noted that despite the company’s very solid backdrop and outlook that “…it is unquestionably expensive.” Pivot raised its one-year price target on Roku to $400 from $240 though held on to its hold rating.

Bank of America still holds the Wall Street-high price target. The bank last month lifted its one-year price target on Roku to $500 from $380 on optimism that its deal to acquire the rights to content from defunct, short form video streaming company Quibi showed its focus on content. 

Roku shares have more than tripled in the past year vs. a 42% gain for the Nasdaq.