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On Monday, Redburn-Atlantic analyst Hamilton Faber upgraded Roku Inc. (NASDAQ:ROKU), a leading streaming platform, from Neutral to Buy, setting a price target of $100.00 for the company’s shares. The upgrade comes as Roku’s stock has declined over 25% year-to-date, with particularly sharp losses of 21.5% in the past week. Faber’s upgrade is based on Roku’s achievement of a significant financial milestone that allows for valuation grounded in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and FCF (Free Cash Flow) multiples. According to InvestingPro data, Roku currently trades at an EV/EBITDA multiple of 78.5x, reflecting the market’s growth expectations.
Faber highlighted Roku’s robust financial position, noting that the company has a substantial cash reserve amounting to $2.2 billion, which is equivalent to 27% of the company’s current market capitalization of $8.07 billion. He anticipates this figure to rise to $3.7 billion by the year 2027. InvestingPro analysis confirms this strong financial position, showing that Roku holds more cash than debt and maintains a healthy current ratio of 2.62. Additionally, the analyst pointed out that 40% of Roku’s costs are variable, which provides a degree of financial flexibility.
The upgrade comes at a time when Roku is recognized for its defensive attributes, which Faber believes could be particularly valuable if the economic environment faces further challenges. The analyst suggests that Roku’s stock now has a valuation floor due to its financial maturity.
Moreover, Faber commented on the broader market trend of advertising dollars shifting towards Connected TV (CTV). He expects this shift to continue and potentially accelerate, especially if macroeconomic headwinds intensify, which could benefit Roku given its position in the CTV market.
Roku Inc. is situated in a dynamic industry where the movement of advertising budgets from traditional media to digital platforms, particularly CTV, is a key driver of growth. Faber’s assessment indicates confidence in Roku’s ability to capitalize on these market changes and maintain a strong financial standing amidst potential economic fluctuations.
In other recent news, Roku Inc. has been the focus of various analyst updates and strategic developments. Citi analysts have revised their price target for Roku, reducing it from $103 to $81, while maintaining a Neutral rating. This adjustment reflects concerns over a weakening macroeconomic environment and tariff risks affecting Roku’s device segment. Meanwhile, JMP Securities has reaffirmed a Market Outperform rating with a $115 price target, citing Roku’s continued leadership in the streaming market despite increased competition. FBN Securities also initiated coverage with an Outperform rating and a $93 price target, highlighting Roku’s initiatives in advertising and revenue streams as potential growth drivers.
Additionally, Guggenheim analyst Michael Morris maintained a buy rating on Roku, expressing confidence in its platform monetization efforts and strategic partnerships, despite lowering the price target from $115 to $100. In governance news, Roku Director Ravi Ahuja announced his resignation effective June 11, 2025, due to time commitments in his role at Sony (NYSE:SONY) Pictures Entertainment, with no disagreements with Roku cited. As these developments unfold, investors are closely monitoring Roku’s strategic moves and analyst perspectives on its future performance.
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