Pivotal Research Starts Roku Inc. (ROKU) at Sell, Asks 'ROKU BROKU?', Issues $60 PT
Pivotal Research analyst Jeffrey Wlodarczak initiates coverage on Roku Inc. (NASDAQ: ROKU) with a Sell rating and a price target of $60.00.
The analyst comments "We see dramatically more competition emerging that will likely drive the cost of OTT devices to zero and put material pressure on advertising revenue splits highlighted by Comcast’s recent moves with its free Xfinity Flex product that is likely to be copied by other distributors. ROKU receives a premium valuation (11.5X ’20 revenue) for potential outsized subscriber growth and ARPU opportunities that we believe are materially reduced post the CMCSA move. While Roku management deserves credit for the asset they have created, everyone has realized the living room is too important and the big boys (led by CMCSA, BUY) with massive leverage are likely to make ROKU growth much more difficult. In our view ROKU stock still looks dramatically overvalued despite the recent pullback and we are initiating with a SELL and a $60 target price."
Shares of Roku Inc. closed at $133.76 yesterday.