UPDATE: Citi Downgrades Roku Inc. (ROKU) to Sell

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(Updated - January 5, 2018 7:27 AM EST)

(updated to add analyst comment)

Citi downgraded Roku Inc. (NASDAQ: ROKU) from Neutral to Sell with a price target of $28.00 (from $27.00).

Analyst Mark may comments "Roku shares are up 266% from its IPO price of $14 just three months ago, and with a $6bn market cap today the company’s valuation is now 8.7x EV/18 Rev and 21x Gross Profit. This compares with its comps at 5.2x Gross Profit, including NFLX at 18x (we note that most of these comps are profitable, whereas we do not forecast Roku reaching profitability until 2019). The reason(s) for the recent stock performance is uncertain, but could include a relatively small free float (18mn shares, but a 30-day ADV of 9.2mn shares), few ways for investors to play the OTT theme, and relatively high revenue and gross profit multiples for OTT comp Netflix (6x and 18x, resp.). While we are positive on the long-term growth of the OTT video market in general and on Roku’s growth outlook in particular, we view the current valuation as more than reflecting that outlook. Catalysts for a decline could include the lockup expiration in March, earnings results that don’t rise to bullish expectations, and/or increased competition from the likes of Google, Amazon and/or Apple."

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 $51.24 yesterday.

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