Street Calls of the Week
Investing.com - Piper Sandler maintained its Neutral rating and $88.00 price target on Roku Inc. (NASDAQ:ROKU) in a research note published Monday. The stock, currently trading at $95.24, has shown strong momentum with a 48% return over the past year. According to InvestingPro data, the company has demonstrated robust growth with revenue increasing 17.32% in the last twelve months.
The firm’s alternative data tracking indicates a CPM spike at the end of Q2 and an ads manager refresh in late July. Piper Sandler also observed steady growth in Pixel Helper adoption, suggesting small and medium-sized businesses (SMBs) are increasingly using Roku’s advertising platform.
Piper Sandler views SMB customers as potentially incremental to Roku’s Platform revenue and worth monitoring into 2026. The firm noted that while SMB ad spend may be modest on a per-customer basis, small businesses could number approximately 5 million in the US, representing a substantial market opportunity.
Roku management recently suggested an approximately $80 billion total addressable market. Piper Sandler referenced Meta as a company that has demonstrated the potency of the SMB customer category.
The research firm currently maintains its Neutral stance based on what it describes as an "uncompelling valuation to growth profile," noting consensus expectations call for approximately 12% year-over-year revenue growth for 2026 against a roughly 24x 2026 EV/EBITDA multiple. However, Piper Sandler indicated it could find the investment story more enticing if SMB contribution scales. InvestingPro analysis reveals the company’s current EV/EBITDA multiple stands at 86.36x, supporting the valuation concerns. Subscribers can access 10+ additional ProTips and comprehensive financial metrics in the Pro Research Report.
In other recent news, Roku announced the launch of Howdy, a new ad-free streaming service priced at $2.99 per month, offering access to thousands of titles and nearly 10,000 hours of entertainment. This new service is available nationwide in the U.S. and features content from partners like Lionsgate, Warner Bros. Discovery, and FilmRise, as well as select Roku Originals. Additionally, Roku’s streaming platform has surpassed broadcast television for the third consecutive month, capturing 21.4% of U.S. TV viewing time in July, according to Nielsen data. This marks a 14% year-over-year increase in Roku’s share of TV viewing, reflecting a continued shift from traditional broadcast to streaming services.
In terms of analyst activity, Citizens JMP raised its price target for Roku to $145 from $110, maintaining a Market Outperform rating. The firm highlighted Roku’s significant reach, noting it serves as the primary television gateway for over 125 million daily viewers. Meanwhile, Jefferies reiterated a Hold rating with a $100 price target, citing Roku’s growing momentum in artificial intelligence initiatives as a key factor. These developments underscore Roku’s expanding presence in the streaming industry and its strategic moves to enhance its service offerings.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.