Thornton cut his share-price target to $367 from $480, however, reflecting the stock’s recent decline. It recently traded at $303.24, up 0.81%.
Roku has slid 24% in the past month through Monday as technology stocks corrected. But it’s still up 244% over the past year amid investor enthusiasm for streaming-related companies.
“We see upside to platform gross profit,” Thornton wrote in a commentary. “Our model is 4%/11%/4%/7% above consensus 1Q/2Q/21/22, similar for platform revenue and EBITDA.” He sees in-line numbers for number of accounts and hours watched.
“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.
In addition, Thornton noted that “valuation has pulled back vs peers and the market and can be supported on absolute discount cash flow.”
Last week, analysts reacted positively to news that the streaming platform had bought the “This Old House” business, including distribution rights. That’s the most popular home-improvement show, with more than 1,500 episodes, including the companion show “Ask This Old House.”
Earlier this month, KeyBanc analyst Justin Patterson upgraded his rating on Roku to overweight from sector weight with a $518 price target.
"We believe Roku is becoming a key enabler of the direct-to-consumer video ecosystem, as evidenced by its large active accounts base (about 51 million as of 4Q20),” Patterson wrote.
Also this month, Roku announced that it has agreed to buy Nielsen’s Advanced Video Advertising business.