UPDATE: Pivotal Research Downgrades Roku Inc. (ROKU) to Sell, Street Low Price Target
Pivotal Research analyst Jeffrey Wlodarczak downgraded Roku Inc. (NASDAQ: ROKU) from Hold to Sell with a Street Low price target of $95.00 (from $350.00).
The analyst comments "Roku reported an overall mixed 4Q results/1Q guidance and more importantly the company reported lower than forecast ’22 revenue and a decision to massively ramp ’22 operating expenses (head count increases and to a lesser extent content investments) that drove ’22 EBITDA guidance dramatically (~$600M) below our expectations. In essence, Roku is going to grow revenue at a slower than expected pace in combination with a massive ramp in expenses, into potentially a global economic slowdown with increasing levels of competition. We reduced our subscriber and revenue expectations, substantially reduced our EBITDA expectations, pushed back our medium/long term profitability expectations substantially, reduced our terminal (’26) EBITDA multiple from 24X to 15X and increased our discount rate from 9% to 10%. The combo drove a substantial reduction in our YE’22 target to $95. The bottom line is with increasing competition, a potential significantly weakening global economy, a market that is NOT rewarding non-profitable tech names with long pathways to profitability and our new target price we are reducing our rating on ROKU from HOLD to SELL."
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 $144.71 yesterday.