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Roku Shares Down After Initial Rally On Q4 Print, But Analysts Optimistic

Dave Royse

Investors bought on the better-than-expected fourth-quarter earnings print from Roku Inc (NASDAQ: ROKU), but the streaming company's showing couldn't hold their interest for a second day, as the stock gave back the gains Friday.

Still, analysts like Roku's positioning as a sort-of aggregator of streaming services, and at least one suggested the stock - already up 160% over the last 12 months - could go higher soon as the Disney+ service from Walt Disney Co (NYSE: DIS) launches in Europe in late March.

Olivetree Financial tech sector strategist Dan Forman praised Roku's Thursday print for a 71% year-over-year gain in platform segment revenue, which was a record at nearly $260 million, and strong player segment revenue growth that also topped expectations. 

Could Roku Hit $170?

"The mix in the quarter was less robust than we would have liked, but we are nonetheless happy with the outcome in light of our view on what was 'priced' and see the DIS EU launch as the next catalyst to consider," Forman said in a Friday note, adding that Olivetree thinks the stock might target $170. 

Roku's stock price on Friday was volatile, starting with a continued post-earnings spike that started after Thursday's $139.05 close and shooting up just short of $150 before dropping back to near $130.

The movement mirrored the stock's up-and-down performance year-to-date. 

Big Year for Roku

It's been a big year for Roku, which has seen its stock rise by about 160% from just over $50 last February.

As a service that provides a way for viewers to watch content from other streamers rather than a focused content creator itself, Roku may be in a stronger place than other companies that actually have to produce the programming as the number of streaming services proliferates.

View more earnings on ROKU

"They've had an incredible year and it looks like they’re continuing to build on that," said TD Ameritrade's Shawn Cruz.

"The benefit for them is, as the streaming pie gets larger, it benefits companies like Roku."

Roku Price Action

The stock was down 5.84% at $130.93 at the time of publication Friday.

Related Links:

Disney Is Now Officially Netflix's Biggest Problem And Yet Another Friend To Roku

Streaming Is Now 20% Of TV Viewing, Netflix Clings To Top Spot

Photo courtesy of Roku. 

Latest Ratings for ROKU

Date Firm Action From To
Feb 2020 Maintains Neutral
Feb 2020 Reiterates Buy
Dec 2019 Maintains Buy

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