Roku is poised for substantial gains ahead, according to KeyBanc Capital Markets. Analyst Justin Patterson upgraded shares of the streaming platform to overweight from sector weight. His $115 target on the stock suggests potential upside of 29.8%. “Roku is benefiting from a combination of secular drivers, monetization initiatives, and an expense ‘self-help’ story,” Patterson wrote in a note to clients. “While we are mindful of stock price volatility, we believe Roku’s ~43% EBITDA growth CAGR (2024-2027E) and clean exposure to the CTV industry provide a compelling risk/reward. … In our view, Roku is turning the corner on monetization and also displaying more expense discipline.” This year, Roku shares are up more than 19%. Much of its pop came after a stronger-than-expected quarterly report , in which the company boasted more than 4 million new streaming households and revenue growth of 22%. Roku also said it was on track to reach 100 million streaming households in the next year, and said it has a focus on continuing to grow advertising demand through third-party platform integrations. ROKU 1Y mountain Roku stock performance over the past year. According to Patterson, Roku’s ad budget shifts from legacy channels to connected TV and its ongoing ad innovation are “creating multiyear tailwinds” that support its earnings before interest, taxes, depreciation and amortization growth. He also views Roku’s established partnerships as significant to its platform growth. The company’s highly engaged audience also bolsters his bullish thesis. “Roku is leveraging The Trade Desk and now Amazon as third-party monetization partners, which we believe can improve fill rates over time,” the analyst said. “We see opportunity for more partners to be onboarded over the coming years (e.g., Google, Yahoo), which we believe should sustain midteens revenue growth.” Of the 33 analysts covering the stock, seven have a strong buy rating on Roku, while 11 have a buy rating, LSEG data shows.
