Roku's Next Chapter: Analyst Sees Big Gains From Streaming And Ad Expansion

On Friday, JP Morgan analyst Brent Navon maintained a Buy rating on Roku ROKU with a price target of $100.

Roku is a leading video streaming platform company that provides access to a wide array of content via its hardware devices and operating software.

Over the last decade, the media and entertainment industry has undergone a significant secular shift toward streaming.

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Roku has been at the forefront of this by enabling households in the US (and increasingly internationally) to rapidly adopt and consume new forms of video entertainment.

Their array of streaming devices/TVs and user-friendly software have led Roku to amass a market-leading position and a substantial user base.

Navon noted that Roku is poised to enter the next phase of monetization, which will drive revenue and profitability growth in the foreseeable future.

Driven by its culture of technological innovation and the rapid growth of streaming, Roku has acquired significant scale. It has over 90 million active accounts, which streamed over 125 billion hours in 2024.

While in the past 10+ years Roku 1.0 was all about building this large scale, we expect Roku 2.0 to be about monetizing that base while also reflecting the substantial engagement of the Roku platform.

Navon noted this scale is an underappreciated asset and is the crux of his bullish thesis.

Roku has a notable scope for expanding its top and bottom lines and should benefit from several favorable industry trends and company-specific actions. These include growth in CTV advertising, secular growth in streaming video domestically and internationally, improving fill rates (the % of ad spaces being successfully filled) of their advertising business, which Navon estimated are <40% via third-party partnerships with DSPs and moderating headwinds within the M&E segment.

Roku trades at ~21 times Navon’s calendar 2026 free cash flow, a ~45% premium to peers in ad tech, and a ~6% premium to peers in M&E/Streaming. The price objective is based on ~27 times Navon’s 2026 free cash flow estimate, which is an 88% premium to advertising/ad tech and a 38% premium to M&E/Streaming.

Navon noted that Roku’s combination of attractive top-line growth, improving profitability, and a long runway for growth warrants a premium valuation.

Over the next three years, Navon projected revenue growth of a 12% CAGR, an EBITDA CAGR of 37%, and a free cash flow CAGR of 50%.

Navon projected first-quarter revenue of $1.01 billion and EPS loss of $(0.28).

Price Action: ROKU stock is down 3.08% at $73.71 at last check Friday.

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