Roku Stock Is Surging Monday: What's Going On?

Roku Inc ROKU shares are trading higher Monday following an analyst upgrade. Here's what you need to know.

What Happened: Cannonball Research analyst Vasily Karasyov upgraded Roku from a Neutral rating to a Buy rating and set a price target of $116, citing room for "more meaningful" upward estimate revisions. 

Consensus sell side estimates for fiscal year 2024 currently forecast video advertising growth of 17.5% and a 7.7% decline in platform revenue. 

"Both of these, in our view, leave room for upside provided the macro conditions don’t deteriorate noticeably," Karasyov said in a new note to clients.

The Cannonball Research analyst believes that connected TV advertising spending is holding up better than feared and he expects that trend to continue into 2024. 

In order for the base case to play out for platform revenue in 2024, Roku's share gains have to "virtually stop" next year, Karasyov added.

"In our view, this is a lower probability event than ROKU maintaining or expanding its market share gains or adding incremental revenue from the decision programmatic channel or the overall spend growth accelerating," the analyst said.

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ROKU Price Action: Roku shares were up 7.75% at $102.29 at the time of writing, per Benzinga Pro.

Photo: courtesy of Roku.