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Roku Analyst Breaks Down What Black Friday Deals Mean For The Stock

Jayson Derrick

Roku Inc (NASDAQ: ROKU) has released its lineup of Black Friday sales and deals, creating the potential for strong fourth-quarter account additions, according to Bank of America Merrill Lynch. 

The Analyst

Ziv Israel maintained a Buy rating on Roku with a price target lifted from $150 to $160.

The Thesis

Roku's Black Friday deals include its typical discounts on streaming devices along with three new smart TV models sold under Walmart Inc's (NYSE: WMT) Onn brand, Israel said in a Friday note.  

Encouragingly the TVs are priced at around half the price point of other TVs with similar attributes, and Roku's exposure to Walmart implies a highly competitive product, the analyst said. 

Other positive takeaways from the Black Friday deals include the lowering of Roku's reliance on a specific TV maker and a Hulu promotion that should support higher AVOD viewing hours, according to BofA. 

The combination of a lower device average selling price on a smart TV implies Roku is set up for "outsized" account growth in the fourth quarter, Israel said.

The analyst is estimating that fourth-quarter active account adds will total 3.5 million, and revenue will come in at $390 million, at the higher end of Roku's guidance.

BofA's revised $160 price target is based on a multiple of 12 times EV/fiscal 2020 revenue estimate of $1.512 billion.

Price Action

Roku shares were up 4.53% at $155.43 at the time of publication. 

Related Links:

Bank Of America Is Bullish On Roku

Roku's Slowing Profit Growth Keeps Analysts, Investors Hesitant On The Stock

Photo courtesy of Roku. 

Latest Ratings for ROKU

Date Firm Action From To
Nov 2019 Reiterates Buy
Nov 2019 Maintains Buy
Nov 2019 Maintains Outperform

View More Analyst Ratings for ROKU
View the Latest Analyst Ratings


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