Stephens Downgrades Roku Inc. (ROKU) to Equal Weight
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(Updated - May 22, 2020 6:45 AM EDT)
Stephens analyst Kyle Evans downgraded Roku Inc. (NASDAQ: ROKU) from Overweight to Equal Weight, PT $105.00 (from $155.00)
The analyst comments "We are downgrading ROKU from OW/V to EW/V, largely on continued TCL concerns. These aren’t new fears to us or ROKU shareholders, we don’t have any new/incremental information on this key partnership and the agreement has clearly been mutually beneficial from a market share perspective, but we believe ROKU has benefited tremendously from TCL’s heavy lifting, TCL still isn’t participating meaningfully in ROKU’s downstream advertising/commerce economics and we have gradually grown more concerned with the duration/magnitude of what we believe is ROKU overearning vs. its most important partner. We are also somewhat concerned by the slow pace of ROKU’s international expansion and what we worry are creeping expectations for OneView (dataxu). We are taking our PT from $155 to $105, which assumes 8.4x EV/21E Platform revenue and 14x 21E Platform gross profit."
Shares of Roku Inc. closed at $113.40 yesterday.
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