- Analysts were optimistic that Roku Inc ROKU and Alphabet Inc GOOG GOOGL Google had reached a multiyear distribution agreement for both YouTube and YouTube TV apps to make them accessible on the Roku operating system.
- Stephens analyst Nicholas Zangler said, "details are scarce." However, the agreement should permit Roku to collect origination fees on new YouTube TV originations.
- The analyst, who also contends that YouTube app-accessibility will deter customers from choosing an alternative TV/OS at the point of purchase, keeps an Overweight rating and $475 price target on Roku shares, implying 119.3% upside.
- Truist analyst Matthew Thornton views the development as a positive that removes a critical short-term overhang. Without YouTube, Roku OS TVs could have been perceived as being at a disadvantage to other TV platforms.
- Thornton views the impact of this deal on Roku's competitive positioning and share of smart TVs as more important than the direct net economics from YouTube TV.
- He keeps a Buy rating and $360 price target on Roku shares, implying a 66.2% upside.
- Price Action: ROKU shares traded higher by 15.3% at $249.76 on the last check Wednesday.
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