Is Now The Time To Buy Roku?

Shares of Roku Inc ROKU are down nearly 30% over the past month, but the stock should reverse course and move higher from multiple catalysts and a more attractive valuation, according to Truist Securities.

The Roku Analyst: Matthew Thornton upgraded Roku's stock from Hold to Buy with a price target lowered from $480 to $367.

The Roku Thesis: Roku is in the early stages of building out its international streaming video business and management is focused on launching TCL Roku TVs in the United Kingdom and Brazil, Thornton wrote in the note. These two markets represent the third and fifth largest international TV ad market (excluding China).

Related Link: BofA Likes Roku's Deal To Acquire Nielsen's AVA Business

Under a bearish scenario, Roku faces an international long-term video advertising reported gross profit of $634 million. Under a base case scenario, this metric rises to $2.4 billion and under a bullish case it rises to $5.2 billion.

Thorton said Roku is poised to address a fast-growing market with a five-year total addressable market compounded annual growth rate of 35% and a 10-year growth rate of 25%. But the company can grow at a faster rate after acquiring linear addressable TV assets from Nielsen.

From a valuation perspective, the recent sell-off has pushed the stock back to an EV/GP/growth multiple from 0.8 times to 0.5 times to 0.6 times. From an EV/sales point of view, the stock has pulled back to the two-year average on an absolute basis and relative to the S&P 500 index.

See also: How to Buy Roku Stock

ROKU Price Action: Shares of Roku were trading higher by 2.3% Tuesday at $307.74