Shares of streaming service platform Roku (ROKU) - Get Report were up 1.4% Tuesday as analysts at Needham see a major upside for the company following the debut of Walt Disney's (DIS) - Get Report new streaming service Disney+.
Disney announced that it has reached a deal that will display the Disney+ option prominently on Roku devices, a move that will get Roku a share of the revenue generated by new people signing up for the yet-to-debut service.
The deal could result in an extra $187 million a year in revenue for Roku by 2024, according to Needham analyst Laura Martin, and could add as much as $1 billion to the company's market cap.
Roku gets between 20% and 30% of subscription revenue when one of its users downloads a streaming app, Martin estimated. Disney expects Disney+ to have between 20 million and 30 million U.S. subscribers by 2024 at a price of $6.99 a month.
Disney+ will debut later this year.
"We also project additional advertising revenue," Martin said. "By 2024, we expect Disney to be spending $500 million marketing its Disney+ services, of which 20% could go to Roku, representing $100 million of incremental ad revenue upside in 2024."
Martin maintained her buy ratings and $85 price target on the stock, which represents a 50% upside over the stock's previous closing price of $56.59.