Shares of Roku (ROKU - Get Report) fall sharply on Friday after Pivotal Research Group initiated coverage on the company with a sell recommendation amid a dramatic ramp-up in competition that it expects will drive the cost of add-on streaming devices like Roku to zero.
In a note initiating coverage, Pivotal analyst Jeffrey Wlodarczak said Comcast's (CMCSA - Get Report) move to free will materially reduce Roku's subscriber growth and average revenue per user opportunities, making the stock "dramatically overvalued," even with its recent selloff.
Pivotal initiated its coverage with a one-year price target of $60, less than half of where it is currently trading, despite its recent stumbles.
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Shares of Roku were down 17.18% to $110.79 in trading on Friday.
Roku has been under pressure in the wake of Comcast's announcement last week that it was releasing a new, free set-top box service specifically designed for its broadband-only customers that will deliver content from multiple streaming platforms, among other features.
While Pivotal pivoted downward on Roku, Oppenheimer took the opposite tack, raising its one-year target to $155 from $120 and maintaining its outperform rating on the stock.
In a research note, Oppenheimer analyst Jason Helfstein lifted his price target amid expectations that Roku can and will offset U.S. competition with an expansion of its international market share.
Helfstein wrote that while the stock remains expensive, he sees it moving higher from current levels given the company's bullish secular outlook, particularly in international markets like the U.K. and Brazil.
Even with the stream of negative news, Roku shares have still risen some 385% this year.