Roku stock will rise 20% to $ 315, analyst says
Actions of Roku (NASDAQ: ROKU) have already climbed 97% so far in 2020, but will reach new all-time highs in the coming year.
That’s according to Needham analyst Laura Martin. On Monday, Martin raised his Roku share price target from $ 255 to $ 315, the highest among his colleagues on Wall Street. His new target represents potential gains for investors of around 20% from the stock’s closing price on Friday of around $ 263.
Martin cited several catalysts that she believes will drive Roku’s action upwards over the coming year. The acceleration of cord cutting during the pandemic is likely to result in more business on Roku’s platform. The company is also benefiting from the growing adoption of connected television. Martin said that around 43 million streaming-only households in the United States and the growing number of streaming devices in each household are catalysts for Roku’s advertising business.
The analyst also noted the company’s unique position in the streaming industry as a key driver. “Roku generates revenue from both AVOD [advertising-based video on demand] and SVOD [subscription video on demand]Martin wrote. This “implies that it is covered regardless of which companies win the streaming war.”
Will Roku’s share price hit $ 315?
Evidence suggests Martin is right about the money. In the third quarter, Roku reported revenue that grew 73% year-over-year, mostly driven by platform revenue which jumped 78%. This segment includes advertising, the Roku channel, and Roku operating system (OS) licenses for smart TVs.
At the same time, Roku’s active accounts soared to 46 million, an increase of 43%, while average revenue per user soared 20%.
Given the impressive growth of these metrics, the potential for significant growth in Roku shares from here is not only possible but probable. A 20% increase in the coming year might end up being prudent.
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