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Roku Stock Is a Winner, But How Much Higher Can It Go?

TipRanks
·2 mins read

Momentum appears to be firmly in Roku’s (ROKU) favor right now. The OTT leader’s stock closed the week at an all-time-high, and one analyst once again raised his bull-case price target for the stock.

Deutsche Bank analyst Jeffrey Rand reiterated a Buy rating on Roku shares and increased the price target from $185 to $235. (To watch Rand’s track record, click here)

What’s behind the positive assessment? Rand’s explanation is simple and clear.

“We have become more positive on Roku as consumers continue to stream more content due to the pandemic and advertisers appear to be spending again after pausing/delaying advertising in 2Q,” the analyst said. “Additionally, we believe concerns about Roku losing its role as the go-to platform for all content have diminished with the agreement of a deal with NBC/Peacock and we continue to believe a deal with HBO Max gets worked out in the near future.”

Following a drawn-out saga, last month NBCUniversal’s streaming platform Peacock finally joined the Roku ranks. The addition is an important one, as it further cements Roku’s position as the leading agnostic content platform, or as Rand puts it, the negotiations’ successful outcome reaffirms Roku’s status as “the Switzerland of Streaming.”

But to silence any remaining naysayers, Roku needs to snag a deal with the one remaining big streaming service not yet available on its platform – HBO Max.

While Rand expected the Peacock deal to go through eventually, the fact an agreement was reached before the holiday season, is “important for Roku's user growth.” Therefore, Rand argues, the one missing piece from the Roku puzzle could act as an additional catalyst, by slotting into place in the very near future.

“While Roku still has not reached an agreement with HBO Max, we continue to believe an agreement will get worked out and considering the importance for Roku of having all premium content available on its platform, we believe a deal could be reached with HBO Max before the holiday season,” the analyst concluded.

Overall, the Buy ratings for Roku are gathering pace, although the share price’s rapid movement has the analysts playing catch up. Overall, the stock has a Moderate Buy consensus rating based on 14 Buys, 5 Holds and 2 Sells. The $179.10 average price target, however, suggests shares will drop by 20% over the next 12 months. (See Roku stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.