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Investing.com - Benchmark has reiterated its Buy rating and $130.00 price target on Roku Inc. (NASDAQ:ROKU), which currently trades at $93.42, ahead of the company’s second-quarter earnings report scheduled for Thursday, July 31. According to InvestingPro data, the stock has shown strong momentum with a 49% return over the past year, though its RSI suggests overbought conditions.
The research firm highlighted potential challenges for Roku’s upcoming earnings announcement, noting that investors may be expecting platform revenue growth of at least 16-17% for the second quarter. This aligns with the company’s recent performance, as InvestingPro data shows revenue growth of 17.3% in the last twelve months. Benchmark believes this target is achievable for the streaming platform provider, despite four analysts recently revising their earnings estimates downward.
Another concern identified by Benchmark involves the ongoing narrative about potential market share loss to Walmart (NYSE:WMT)/Vizio, though the firm noted this competitive threat may be overstated given the time required for Walmart to transition its ONN TVs and the likelihood that not all Walmart TVs will be affected.
Benchmark mentioned that Roku could potentially raise guidance assuming a more stable macroeconomic environment, with modest benefits expected from Amazon (NASDAQ:AMZN) DSP coming online in the fourth quarter, though it may take 12 months to fully scale.
Despite short-term challenges, Benchmark continues to view Roku as one of its "top ideas" for long-term investment, even as the company faces the hurdle of exceeding increasingly higher buy-side expectations to break out of its recent trading range.
In other recent news, Roku Inc. has seen several significant developments. KeyBanc upgraded Roku’s stock rating to Overweight, setting a price target of $115.00, citing the company’s potential for advertising growth and strategic partnerships that could drive faster EBITDA growth than current estimates. Needham also raised its price target for Roku to $100.00, highlighting an improvement in labor productivity, with revenue per full-time employee increasing significantly between 2021 and 2024. Citizens JMP increased their price target to $110.00, attributing this to Roku’s platform growth and successful integration with Amazon DSP. The firm also maintained a Market Outperform rating, noting Roku’s strong position in the U.S. streaming market. Additionally, Roku has expanded its hardware offerings by launching its first Roku-made TVs in Canada, available exclusively through Best Buy (NYSE:BBY). These TVs include various features such as Roku Smart Picture technology and access to over 200 live TV channels. According to a Hub Research report, Roku TV has doubled its market share as the "most used TV set brand," demonstrating the brand’s growing popularity and distribution. These recent developments reflect Roku’s strategic efforts to strengthen its market presence and operational efficiency.
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