Roku Analyst Sees 25% Upside As TV Ad Dollars Go Digital

The streaming wars’ biggest winner might be the company that helps viewers navigate them all. That’s the thesis behind JMP Securities’ bullish new coverage of Roku, which sees the streaming platform capitalizing on a massive shift of advertising dollars from traditional TV to streaming services.

JMP Securities analyst Matthew Condon on Tuesday initiated coverage on Roku, Inc. ROKU with an Outperform rating and a $98 price target. 

“With multiple catalysts across its Home Screen and The Roku Channel monetization and deepening third-party demand partnerships, we believe revenue estimates can move higher from here,” Condon wrote in his note.

Roku recently announced that it has surpassed 90 million streaming households, marking its expansion into nearly half of all U.S. broadband households and securing its position as the leading TV operating system in the U.S., Canada and Mexico.

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Expert Ideas: Condon sees a potential upside of 25.2% for Roku stock, as reported by CNBC.  The analyst highlighted that $166 billion of linear TV advertising spend is shifting to connected TV as streaming platforms continue aggressively acquiring rights to live sporting events. 

Condon said "near-term competition concerns are overdone" and expects continued growth, particularly from its Home Screen and Roku Channel which act as a "lead-in" for the platform's other services. 

NFLX: Roku's competitor, streaming giant Netflix, Inc. NFLX is set to report its fourth-quarter earnings after the market close on Tuesday. Investors will be watching for the platform's subscriber count and advertising revenue related to recent live sporting events. 

Analysts are expecting Netflix to report earnings of $4.19 per share on revenue of $10.11 billion for the quarter, according to data from Benzinga Pro. 

ROKU Price Action: Roku’s stock is trading 5.4% higher at $80.02 at the time of publication Tuesday.

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