Roku Inc ROKU stock was trading lower by over 22% on Feb. 16 following a cautionary statement from the smart TV operating system company.
The latest financial report from Roku indicated a challenging year ahead, due to decreased spending in the entertainment industry, causing a significant decline in stock value.
On a positive note, Roku reported better-than-expected fourth-quarter earnings.
For details on fourth-quarter results, read: Roku Q4 Earnings Highlights: Revenue Beat, EPS Beat, Q1 Guidance, 80 Million Active Accounts
Here are some key analyst takeaways from the release.
- Macquarie Equity Research analyst Tim Nollen maintained his Outperform rating while reducing the price target from $93 to $88.
- Wedbush analyst Alicia Reese maintained Outperform rating and her 12-month price target as $120.
- Oppenheimer analyst Jason Helfstein downgraded the stock to Perform from Outperform, while removing his price target of $100 on the stock.
- Piper Sandler analyst Matt Farrell, CFA reiterated a Neutral rating and price target of $81.
Check out other analyst stock ratings.
Macquarie Equity Research on Roku
Nollen noted that despite strong financial results in its fourth quarter and optimistic guidance for 2024, concerns about platform growth and operating costs led to a reduction in estimates. He highlighted Roku’s entry into the higher-end TV category and expansion of device sales distribution.
Wedbush on Roku
Reese viewed Roku’s fourth quarter as nearly flawless, anticipating growth in newfront ad spending and touting new advertising products, which present significant opportunities. The company is prioritizing Free Cash Flow (FCF) expansion and aiming for balanced new initiatives.
Oppenheimer on Roku
Helfstein anticipated the stock to be “range-bound until platform growth returns to high teens.” Despite near-term headwinds, Roku aims to maintain its market leadership in consumer-facing connected television solutions. The company faces challenges in 2024, particularly in SVOD advertising, SVOD price increases, and Media & Entertainment advertising.
Piper Sandler on Roku
Farrell observed that Roku’s fourth quarter results and first quarter guidance surpassed expectations, but expressed concerns about a lack of acceleration in platform revenue, limited expansion in adjusted EBITDA estimates, and an uneven ad market recovery. Management expects adjusted EBITDA positivity in 2024, but a cautious stance is advised until clarity on the platform revenue growth outlook.
ROKU Price Action: Roku stock was trading at $71.79 at the time of publication Friday.
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