Roku 'Will Find A Ready Market Abroad,' Macquarie Says In Upgrade

Roku Inc ROKU has settled 36% below the all-time high it struck in September, and one analyst sees a buying opportunity. 

The Analyst

Macquarie analyst Timothy Nollen upgraded Roku from Neutral to Outperform and raised the price target from $110 to $130.

The Thesis

Nollen sees 20% upside potential in the near-term and predicts a tripling of value by 2023. (See the analyst's track record here.) 

"Roku has built a leading position in the U.S., and we believe its devices will find a ready market abroad," he said in a note, according to TheStreet. 

While other Street experts warn of rising competition, Nollen is relatively unconcerned given the size of the field.

The analyst anticipates significant growth in sales of connected TV devices and advertising, with active accounts expanding from 31 million to 72 million in 2022.

Such growth could yield total revenue of $2.7 billion, he said — almost three times Roku's 2019 guidance.

Nollen’s upgrade and positive thesis follow a rough month for Roku.

The stock suffered an unprompted selloff, the introduction of rival products from Facebook, Inc. FB and Comcast Corporation CMCSA, a Sell rating from Pivotal and the sale of shares by management.

The stock has made a marginal recovery with the rollout of two Walmart Inc WMT-exclusive products and Nollen’s optimism.

Price Action

Roku shares were up 5.54% at $113.98 at the time of publication. 

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Photo courtesy of Roku.