Time for Roku (ROKU) Shorts to Cover - Needham & Company

Needham & Company analyst Laura Martin reiterated a Buy rating and $50 price target on Roku Inc. (NASDAQ: ROKU) saying it is time for shorts to cover.

Martin commented, "ROKU has about 15mm shares in the public float, yet trades an average of about 10mm shares ($40mm) each day in part because there are about 7.7mm shares short. We suggest that it’s time to cover because: 1) ROKU’s 4Q17 earnings could over-deliver guidance on Feb 21st; 2) recent headlines suggest ROKU’s strategic position is improving; 3) ROKU’s moats are improving; 4) ROKU will be added to indices in 2018, so passive money must buy ROKU for the first time; 5) ROKU’s valuation is inexpensive; and 6) we expect ROKU to be bought by a larger company over time. Netflix is the best valuation comp for ROKU because both are pure-play streaming companies. ROKU’s 7x EV/Revenue multiple is well below NFLX’s 10x. We prefer ROKU to Netflix since Disney, Google, Amazon, etc. launching new OTT services helps ROKU but hurts NFLX."

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 $39.92 yesterday.

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