Defying Expectations: Roku's Platform Revenue Stabilizes As Active Accounts Grow, Analysts Remain Positive

Shares of Roku Inc ROKU Thursday eased in premarket trading, after soaring in the previous trading session on better-than-expected quarterly results.

Here are some key analyst takeaways from the earnings call.

Oppenheimer On Roku

Analyst Jason Helfstein reaffirmed an Outperform rating, while reducing the price target from $85 to $75.

Roku’s Platform revenues seem to have stabilized and there are “upcoming tailwinds from advertisers, agency, retail media and DSP integrations,” Helfstein said in a note. “Moderating expense growth through '23E is setting up EBITDA with profitability in '24,” he added.

The company’s active accounts grew 17% year-over-year in the first quarter, the analyst stated. “Given headwind from slowing ad spend by SVOD providers and higher scatter market exposure, ROKU should be one of the first beneficiaries of any rebound in the ad market,” he further wrote.

Raymond James On Roku

Analyst Aaron Kessler reiterated a Market Perform rating on the stock.

“Roku reported 1Q revenue and EBITDA upside (revenue upside mainly from devices) though overall Platform (advertising) revenues remained soft (-1% y/y vs. +5% last quarter),” Kessler wrote.

“Roku guided 2Q revenues largely in line with the Street with the expectation that ad revenues remain soft throughout 2023,” he added.

Check out other analyst stock ratings.

Needham On Roku

Analyst Laura Martin maintained a Buy rating and price target of $80.

Roku’s quarterly results were “underwhelming” due to “the weak scatter market & soft ad demand, coupled with rapid y/y cost growth,” Martin said.

“Because Roku has promised to get its costs under control by 4Q23, and we expect ad demand to rebound within 12 months, we believe Roku's valuation issues to be near-term, not structural,” she added.

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William Blair On Roku

Analyst Ralph Schackart reiterated an Outperform rating on the stock.

Roku’s smart TV sales were better than expected and its operating system grabbed a record high share of the U.S. market, at 43%, “larger than the three nearest competitors combined,” Schackart wrote in a note.

The company also generated record-high user engagement “with 3.9 streaming hours per account per day, while more than half of U.S. households have cut the cord,” the analyst said. Roku is focusing on “new monetization opportunities in partnerships, third-party relationships, and new ways to sell ads through DSPs,” he added.

ROKU Price Action: Shares of Roku were up 3.2% to $58.38 at the time of publication on Thursday.

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