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On Friday, Rosenblatt analysts adjusted their outlook on Roku Inc. (NASDAQ:ROKU), lowering the price target from the previous $100.00 to $75.00, while maintaining a Neutral rating on the company’s shares. The adjustment comes in the wake of Roku’s first quarter financial results for the year 2025, which were in line with market expectations. According to InvestingPro data, analyst targets for Roku currently range from $60 to $130, reflecting the stock’s significant volatility - one of several key insights available in the platform’s comprehensive Pro Research Report.
Roku reported a year-over-year revenue increase of 16%, alongside a 37% growth in adjusted EBITDA. The company’s actual revenue growth reached 18% over the last twelve months, generating $4.1 billion in sales. Despite these positive figures, Rosenblatt’s analysis indicates a potential slowdown in the company’s Devices business, with the Platform business expected to remain relatively stable.
The firm’s decision to reduce the price target by $25 reflects a cautious approach, taking into account the current economic environment and its effects on Roku’s enterprise value (EV) multiple. Rosenblatt now anticipates that the 20 times multiple on Roku’s estimated 2026 earnings will continue to be the norm given market conditions.
Roku’s performance in the first quarter, while solid, has led to a tempered outlook from Rosenblatt due to the anticipated deceleration in one segment of its business. The lowered price target suggests a conservative stance, factoring in the broader market influences that could impact Roku’s valuation going forward.
In other recent news, Roku Inc. reported its first-quarter 2025 financial results, exceeding analysts’ expectations with an earnings per share (EPS) of -$0.19, compared to the projected -$0.26. The company’s revenue reached $1.02 billion, slightly surpassing the anticipated $1.01 billion. Despite these positive earnings, Evercore ISI lowered its price target for Roku from $105.00 to $80.00, maintaining an "In Line" rating. This decision followed Roku’s mixed performance, with gross profit and EBITDA falling short due to shifts in advertising buyer behavior. Roku’s management has revised its revenue guidance for FY25, adopting a more conservative outlook for device sales and platform gross margin. However, the company reaffirmed its full-year platform revenue growth expectation of 15-17%, with no significant changes in gross profit anticipated. Additionally, Roku highlighted strong platform revenue growth driven by increased engagement and strategic acquisitions, such as the purchase of Friendly, a skinny bundle subscription service. Despite macroeconomic uncertainties, Roku remains focused on reaching 100 million households, although this goal now hinges more on third-party devices.
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