Roku lifted at Wolfe Research as forecasts now look realistic By Investing.com

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Roku lifted at Wolfe Research as forecasts now look realistic

Published Mar 14, 2023 10:08

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By Sam Boughedda

Roku (NASDAQ:ROKU) was upgraded to Peer Perform from Underperform, with its price target removed by Wolfe Research analysts on Tuesday.

They told investors in a research note that the pillars of the firm's previous Roku downgrade either happened or "defied us."

"After a hectic two years - lockdown-driven growth followed by softening consumer/advertising spend, we see less downside risk for arguably the best-in-class gatekeeper to streaming TV," the analysts wrote.

He explained that the firm's view has now shifted as net add forecasts look realistic despite growing competition.

"While we remain concerned about long-term pressure on OS market share (TV OEMs, Google, Amazon, cable), Roku's '22E active account growth proved resilient," stated analysts.

They added that the data supports Roku's net adds conversion cycle normalizing from the first half 2022 lows, while a shift to TVs drives better active account penetration of the installed base.

"Therefore, we see our '23E net adds of +7.0M (+7.2M cons) as relatively de-risked when considering the market, '22 one-offs, & Roku's fully-built TV line (admittedly only been a week)," analysts said.

Furthermore, they pointed to the advertising market in the first quarter improving monetization as another reason for the upgrade.

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