Guggenheim Upgrades Roku Inc. (ROKU) to Buy

Guggenheim analyst Michael Morris upgraded Roku Inc. (NASDAQ: ROKU) from Neutral to Buy with a price target of $75.00.

The analyst comments "Key Message: We are raising our rating on ROKU shares to BUY from NEUTRAL and establishing a 12-month price target of $75, representing 21% potential upside to the August 22, 2024 close price of $61.81. We expect investor enthusiasm for the ROKU story to grow into 3Q earnings in November as the company makes progress toward broadening video inventory advertising sales via third-party demand-side platforms and improved home screen monetization. This expected progress should further bolster confidence in ROKU as a unique top-line acceleration story in 2025. Our revised rating reflects 1) financial estimates ahead of consensus for 2024 and 2025, and 2) attractive relative valuation based on a 15% normalized OIBDA margin, which we believe the company will progress toward through a combination of revenue growth and cost management. Our primary concerns remain unchanged: Leadership has been slow to take advantage of its significant position in the connected TV (CTV) marketplace, fueling our strategic concerns, and competition in the advertising and CTV marketplaces could pressure financial performance. That said, we believe that the impact of strengthened monetization and leadership execution by Roku Media President Charlie Collier and Chief Financial Officer Dan Jedda should bolster the growth narrative and disciplined performance over the next three-to-six months. This should in turn drive further incremental investor enthusiasm and potentially better position the company for long-term outperformance."

For an analyst ratings summary and ratings history on Roku Inc. click here. For more ratings news on Roku Inc. click here.

Shares of Roku Inc. closed at $61.81 yesterday.

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