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On Friday, Benchmark analysts increased their price target on Roku Inc. (NASDAQ:ROKU) shares from $100 to $130, while reiterating a Buy rating. Currently trading at $98.19, the stock has shown remarkable momentum with a 54% gain over the past six months. The firm's analysts highlighted Roku's impressive performance in the last quarter of 2024, where the company reported a 25% year-over-year growth in Platform revenue. This growth surpassed even the most optimistic buy-side estimates that were anticipated before the earnings report. According to InvestingPro data, Roku maintains a market capitalization of nearly $14 billion.
The company's management has pledged to accelerate Platform revenue growth in 2025, excluding political advertising revenue. With an overall Financial Health Score of "FAIR" from InvestingPro, and particularly strong scores in price momentum and cash flow, Roku appears well-positioned for growth. Benchmark's analysts noted that their initial concerns about the company's conservative stance at the beginning of the year were proven to be unnecessary. Despite the new guidance suggesting a 12% growth in platform revenue for the year, which is slightly below the Street's and Benchmark's previous forecast of 13%, the analysts believe that the initial guidance might still be conservative.
Roku's guidance for a 16% Platform growth at the start of the year is against a tough comparison from the previous year. However, this guidance is expected to build investor confidence in the company. Furthermore, Roku's EBITDA guidance of $350 million for the year is above the consensus and aligns more closely with investor expectations, reinforcing the belief that the company's momentum will continue.
The analysts acknowledged that valuation concerns might persist among investors, but they expressed increased confidence in Roku as their top pick for the year. They pointed out that Roku's performance stands out in the connected TV (CTV) landscape, which has seen mixed results from other companies. The positive outlook from Benchmark suggests that Roku may be poised for a breakout year.
In other recent news, Roku Inc. has been the subject of several analyst upgrades and price target adjustments. Morgan Stanley (NYSE:MS) analysts maintained an Underweight rating on the company's shares but raised their price target to $75, acknowledging Roku's successful execution of growth initiatives. However, they also noted potential financial challenges ahead, suggesting a complex outlook for the company.
Needham analysts, on the other hand, reaffirmed their Buy rating and increased their price target to $120. They highlighted Roku's strong performance, impressive installed base growth, and significant boost from political ad revenues. They also noted Roku's anticipated free cash flow to exceed EBITDA in the fiscal year 2025.
Susquehanna raised its price target on Roku shares to $125 while maintaining a Negative rating. Despite this, the firm sees Roku well-positioned to capitalize on the significant connected TV (CTV) advertising opportunity. Wolfe Research analyst Peter Supino increased the price target to $108 while maintaining an Outperform rating, highlighting Roku's impressive platform revenue growth.
Lastly, Pivotal Research upgraded Roku from a Hold to a Buy rating and dramatically increased the price target to $125. They anticipate a revenue growth of 14.5% for 2025 and project a significant rise in Roku's EBITDA for the same year. The analysts believe that the market has yet to fully appreciate Roku's value. These are all recent developments that investors should take note of.
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