Analysts at CFRA Research upgraded Roku Inc. (NASDAQ:ROKU) stock to Hold from Sell and raised the target price to $89 from $75.
"We think ROKU is in the right place for favorable long-term trends to TV video streaming from linear networks (pay TV and broadcast),” analysts wrote in a note.
“Since last November, our skepticism was that the trajectory to profitability would take longer than expected, although we think the market is more excited about the shift by viewers to streaming.”
Therefore, analysts hiked the PT on ROKU by $14, applying a forward Price/Sales ratio of 3.6x, which surpasses the 2.0x average of its peers.
CFRA’s estimates for the streaming device maker’s earnings per share (EPS) remain unchanged at -$3.50 for 2023 and -$2.40 for 2024.
In Q3, the company's Platform segment, which encompasses subscriber and advertising revenue and accounts for 86% of the total revenue, witnessed a year-over-year revenue growth of 18%, analysts highlighted.
“Most of ROKU's ad revenue is in the scatter market, which benefits from a soft landing in the U.S. Risks are more platform competition, weak device sales, and weaker video streaming demand in the U.S. and Mexico."
ROKU rose 1.5% ahead of Thursday's market open.