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On Wednesday, Citi analysts revised their outlook on Roku Inc. (NASDAQ:ROKU) shares, reducing the price target to $81 from the previous target of $103, while maintaining a Neutral rating on the stock. The adjustment reflects growing concerns about a deteriorating macroeconomic environment and increased tariff risks impacting the company’s device segment. The stock, currently trading at $71.37, has experienced significant volatility, with InvestingPro data showing a 9.3% decline in the past week alone.
The analysts stated, "We are lowering our target 2026 FCF multiple from ~30x to 22x to account for increasing concerns of a weakening macro environment and heightened tariff risks associated with Roku’s device segment. As a result, our target price goes from $103 to $81. We maintain our Neutral rating." According to InvestingPro analysis, Roku maintains strong financial health with a current ratio of 2.62 and holds more cash than debt on its balance sheet, though profitability remains a challenge with negative earnings per share of -$0.89 over the last twelve months.
Roku, known for its streaming devices and platforms, has been navigating a complex economic landscape that has prompted Citi to reassess the company’s future free cash flow (FCF) multiple. By lowering the FCF multiple, Citi signals a more conservative estimate of Roku’s value, taking into account the potential headwinds it may face. Despite challenges, the company has demonstrated revenue growth of 18% in the last twelve months, though it trades at a relatively high EV/EBITDA multiple of 108x.
The revised price target of $81 is based on the new FCF multiple, which has been significantly reduced from approximately 30 times to 22 times. This change indicates a shift in expectations regarding the company’s growth and profitability in the coming years.
Despite the lowered price target, Citi’s Neutral rating suggests that the analysts do not see significant downside or upside to the current stock price, advising a stance of watchfulness as the market processes the potential impact of these risks on Roku’s financial performance.
In other recent news, Roku Inc. has been the subject of several analyst evaluations and company announcements. JMP Securities has reaffirmed a Market Outperform rating with a $115 price target for Roku, highlighting its strong presence in the streaming market, particularly in the budget TV segment. FBN Securities also initiated coverage with an Outperform rating and a $93 price target, recognizing Roku’s initiatives in expanding video advertising and potential revenue growth. Additionally, Guggenheim analyst Michael Morris maintained a buy rating, citing Roku’s strategic focus on monetization and partnerships, despite lowering the price target to $100 due to peer multiple contraction.
Roku is also experiencing changes in its corporate governance, as Director Ravi Ahuja announced his resignation effective June 2025, which will reduce the board size from nine to eight members. This decision is not related to any disagreements with the company’s operations. Meanwhile, The Roku Channel has shown significant growth, now ranking as the second most-watched app on Roku televisions and capturing 4.9% of U.S. streaming time in January, according to Nielsen data. This increase in viewership reflects the channel’s rising popularity.
Roku’s penetration in international markets, such as Mexico and Canada, remains strong, with substantial household reach. As the company navigates these developments, stakeholders are closely monitoring its strategic direction and market performance.
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