147.42 -0.92 (-0.62%)
After hours: 7:18PM EST
|Bid||147.31 x 1300|
|Ask||147.50 x 900|
|Day's Range||147.56 - 153.35|
|52 Week Range||26.30 - 176.55|
|Beta (3Y Monthly)||1.67|
|PE Ratio (TTM)||N/A|
|Earnings Date||Feb 19, 2020 - Feb 24, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||143.81|
One phrase comes to mind when you think of hedge fund Two Sigma: quantitative powerhouse. Founded in 2001 by John Overdeck and David Siegel, the hedge fund startup has become a $60 billion quant shop that uses a technology-based approach to guide its investing strategy. Its innovative use of fields like machine learning and distributed computing has enticed a host of blue-chip clients as well as first-rate talent.Based on the $15.2 billion net gain generated for its investors in the last 18 years, Two Sigma earned a spot on LCH Investments’ annual list of the most successful hedge funds of all time. No wonder the Street’s focus locks in on Overdeck and Siegel when the fund makes a portfolio addition.Bearing this in mind, we wanted to take a closer look at 3 trending stocks the fund added to its basket of holdings. With the help of TipRanks’ Stock Screener tool, we discovered that all of these names are buy-rated and boast substantial upside potential (depends who you ask) from the current share price. Here’s the lowdown:Roku Inc. (ROKU)For those just tuning in to Roku now, the streaming player company has captured Wall Street’s attention with its massive 372% climb year-to-date. While some bears have pointed to the recent dip as a cause for concern, the bulls believe that Roku is charging full speed ahead.With this in mind, Two Sigma has initiated position in ROKU, snapping up 177,100 shares in Q3. This puts the value of the purchase at more than $18 million.Needham analyst Laura Martin cites accelerating subscription video on demand revenues as the key upside valuation driver for Roku in 2020, noting that this actually decreases the investment risk. Roku is the largest aggregator of ad-driven TV and film content, with Martin estimating it will report about $850 million of total advertising revenue in 2020.“The enormous amount of money at stake (ie, $70B/year vs the tiny amount OTT TV and film ad inventory) and the growing inability of brands to follow viewing behind a growing number of SVOD pay walls makes OTT ad units more valuable, especially the young wealthy viewers who are more likely to view streaming content,” the analyst explained.On top of this, Martin sees Roku as the primary beneficiary of new streaming services from Disney+, Apple+, Peacock/CMSCA and HBOMax/AT&T thanks to the 32 million U.S. connected-TV homes that make up its installed base. Based on all of the above, the five-star analyst kept her Buy rating, while boosting the price target to $200 (from $150). At this target, shares could rise 38% in the next twelve months. (To watch Martin’s track record, click here)Like Martin, Macquarie’s Tim Nollen has high hopes for Roku. “We believe connected TV (CTV) device usage and advertising growth will continue to rise exponentially, and Roku is in prime position to both drive and harness this,” he wrote in a note in which he maintained his bullish call and bumped up the price target to $170. (To watch Nollen’s track record, click here)Looking at the consensus breakdown, not everyone on the Street is on the same page as the analysts. The average 12-month price target on the stock stands at $148, which implies a modest 2% increase from its current price. This is based on 9 "buy," 2 "hold," and 2 "sell" ratings received in the last three months. (See Roku stock analysis on TipRanks)Facebook (FB)Overdeck and Siegel’s fund just upped the ante by snapping up 1,306,250 shares of Facebook with a value of over $232.6 million, increasing the holding by a whopping 711%.Indeed, when it comes to the social media giant, some analysts tell investors the outlook for 2020 plus the current attractive share price equals a Buy.Part of the bullish sentiment on Wall Street comes as a result of its advertising segment. In its third quarter, FB’s ad growth remained at more than 30%, with 2020 guidance landing in-line with investors’ expectations. Susquehanna’s Shyam Patil thinks that this target is achievable or even beatable as Instagram Stories monetization continues to scale and incremental growth drivers like Instagram Shopping as well as Explore begin to accelerate. The analyst puts his rating where his mouth is, reiterating a Positive rating alongside a price target of $245. (To watch Patil’s track record, click here)Like Patil, Morgan Stanley’s Brian Nowak is especially excited about user engagement as it creates a “layer cake of monetization."“Engagement creates monetization opportunities and FB continues to excel at innovative monetization. Looking ahead to ’20 and beyond, we remain bullish about the still untapped engagement/use cases to monetize including Instagram Explore, commerce across FB Marketplace and Instagram, product sponsorships, video and Instagram TV…and (over the long-term) messaging,” he explained. To this end, Nowak decided to stay with the bulls. According to the five-star analyst’s $250 price target, shares could surge 26% in the next twelve months. (To watch Nowak’s track record, click here)In general, other Wall Street analysts take a similar approach. With 28 Buys, 3 Holds and 1 Sell, the verdict is that Facebook is a Strong Buy. Its $236 average price target implies a potential twelve-month gain of 19%. (See Facebook stock analysis on TipRanks)Snap Inc. (SNAP)The company behind the famous photo-sharing app has certainly impressed Wall Street with its 171% year-to-date gain. Despite less than ideal user growth in the U.S., some analysts argue that this is nothing to get scared about.With this background, Two Sigma just scooped up a chunk of Snap shares. We’re talking about a total of 5,528,277 or $87.3 million-worth.Kevin Rippey, an Evercore ISI analyst, reminds investors that revenue growth accelerated for the third quarter in a row to 50% year-over-year and losses narrowed to less than $50 million on an adjusted EBITDA basis. While acknowledging that the 1 million quarter-over-quarter U.S. user growth most likely drove the post market selloff, he claims that management’s guidance still reflects ongoing momentum in audience trends. This prompted the analyst to comment, “We’re a bit surprised to not see more initial enthusiasm given aggregate user trends and guidance, as it’s increasingly clear that the accelerative dynamics in SNAP’s business are sustainable.” As a result, Rippey's Outperform rating and $20 price target on Snap stock remain unchanged. (To watch Rippey’s track record, click here)Another Snap bull, Guggenheim’s Michael Morris, thinks that Snap has what it takes to further monetize its core platform: "We also have confidence that Snap will continue to monetize its core platform while creating incremental pathways to scale revenue and complement the user experience – particularly given untapped revenue opportunities within AR, Maps, and Games." Morris adds that Snap’s “unique scale among valuable younger audiences," lends itself to a foundation for sustained equity appreciation. To this end, the four-star analyst maintained his bullish thesis and $22 price target, bringing the upside potential to 47%. (To watch Morris’ track record, click here)In terms of Snap’s Street consensus, analysts are split almost right down the middle. Out of 21 total analyst ratings published in the last three months, the Buys beat out the Holds by just 1, making the consensus a Moderate Buy. In addition, the average price target of $19 amounts to 26% upside potential. (See Snap stock analysis on TipRanks)
Although the S&P 500 index futures were in the red at the top of the show, co-host Dennis Dick insisted they weren't red enough. On this occasion, stocks didn't rally during the broadcast and the index shaved nearly 30 handles from the start of the show until it found buyers 20 minutes into the session. Where To Hide? For example, when growth stocks fall out of favor, investors may turn to value stocks to employ a more conservative approach.
A day after Morgan Stanley downgraded Roku’s stock, Needham’s Laura Martin reaffirmed her Buy rating, predicting strong growth for the third-party streaming services on its platform.
Roku Inc. shares are up 6% in Tuesday morning trading after Needham analyst Laura Martin raised her price target on the stock to $200 from $150. The new target is the highest listed on FactSet. Needham's increased optimism comes a day after Roku shares plunged 15% following a downgrade to underweight from Morgan Stanley. Martin recommends buying the dip on Roku and is upbeat about the company's potential to benefit from the launch of new streaming services, including from AT&T Inc. and Comcast Corp. . "In 2020, Roku's key upside valuation driver will be accelerating subscription [streaming-video-on-demand] revenues, which lowers investment risk, we believe," she wrote. "Additionally, Disney+, Apple+, Peacock/CMCSA and HBOMax/AT&T should accelerate customer acquisition spending, and Roku is a key beneficiary owing to its installed base of 32 million US connected-TV homes." She kept a buy rating on the stock, which has surged 373% so far this year, as the S&P 500 has increased 23%.
(Bloomberg) -- Roku Inc.’s price target was raised to a Street-high view of $200 from $150 at Needham, which called the company “a key beneficiary” of the shift toward streaming video.The higher target comes just one day after Morgan Stanley downgraded the stock to the equivalent of a sell, warning about growth and valuation following steep 2019 gains. The downgrade sparked a 15% decline in Monday’s session, but Needham urged investors to “buy on dips.”Shares of the company gained 4.5% in early trading on Tuesday. While the stock has been a massive outperformer thus far this year -- having risen more than 340% -- recent moves have been volatile. It is up nearly 40% from a September low, but down 15% from a peak hit last week.The 2019 gains have been largely driven by the massive growth in the streaming-video space, which Roku has capitalized on by being a neutral platform for content companies. Needham, which reiterated its buy rating on the company, expects this trend to continue next year.“In 2020, Roku’s key upside valuation driver will be accelerating subscription SVOD revenues, which lowers investment risk,” analyst Laura Martin wrote to clients, referring to streaming video on demand. She noted the growing competition in the streaming-video space; in addition to Netflix, Walt Disney and Apple, there are soon-to-be-released services from Comcast and AT&T.Just as YouTube is “the winning aggregator of user-generated videos,” she wrote, “Roku will be the winning aggregator of TV and films.”(Updates stock to market open in third paragraph.)To contact the reporter on this story: Ryan Vlastelica in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Catherine Larkin at email@example.com, Steven Fromm, Janet FreundFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Roku Inc (NASDAQ: ROKU ) slipped 15% Monday on a Morgan Stanley downgrade . The scenario presented a fortunate buy opportunity for one market expert. The Rating Needham analyst Laura Martin maintained ...
We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat […]
(Bloomberg Opinion) -- You’ve just witnessed the semi-annual Roku Inc. sell-off. It’s the time of year when investors come to the abrupt realization that they’ve probably paid too much to own shares of the high-flying streaming-TV company, as if valuing anything at 300 times Ebitda were ever rational. Here’s how it usually goes down: An equity analyst downgrades Roku, sending the stock into a tailspin, which leaves onlookers wondering what terribly bad thing occurred at the company — or what a Roku even is. This time, that analyst was Benjamin Swinburne of Morgan Stanley. He cut his rating to the equivalent of a “sell,” and oh, did the market listen: Roku plunged 15% on Monday for one of the Nasdaq’s worst post-Thanksgiving showings.But what changed the last few days between carving the turkey and putting up the Christmas tree? Nothing, really. In fact, Roku’s stock price is still up 344% for the year, and it’s still the most popular streaming-TV device. As of last week, the company was valued at a whopping 322 times analysts’ forward 12-month Ebitda forecasts. Swinburne’s report explained that while Roku’s strategy is sound, its sky-high valuation is unjustified given that revenue growth is projected to slow.When several other analysts gave a similar word of caution in April, it sparked a sell-off then, too. But just as I noted at the time, it’s not that Roku’s business prospects were suddenly and dramatically altered; it’s more a function of an overheated stock price. If you think a perpetual cash-burner like Netflix Inc. is pricey, keep in mind that Roku’s own Ebitda multiple is still almost 10 times higher, even after Monday’s drop:Part of the problem is that in the bewildering market for streaming-TV services, it’s difficult to grasp what Roku does and to hedge what its role will be in the streaming wars. And certainly the $1.7 billion of short interest in Roku shares (per S3 Partners data) adds a degree of pressure to its trading price.Roku is fighting the giants of the streaming world on two fronts. It sells hardware and provides software that’s pre-installed on certain television sets, all of which allow users to access their video-app subscriptions, such as Netflix, Disney+ and CBS All Access in one place. Roku is also competing for advertising dollars through the ad-supported Roku Channel, which is less of a channel in the traditional cable-TV sense and more of a hodgepodge of free movies and shows for cord-cutters looking to save money. Roku devices accounted for 44% of all connected-TV viewing hours in the latest quarter, while Amazon.com Inc.’s Fire TV is in a distant second place with a 20% share, according to Conviva, an industry analytics firm. That’s a strong lead, but competition will intensify. The next frontier in streaming is offering bundles that help solve the consumer pain point of needing to pay for multiple apps individually. Eventually, users will gravitate to platforms with this capability. Comcast Corp.’s Flex platform, I argued last month, may be a step toward bundling streaming services in the way the cable giant packages traditional TV channels and its other services. Apple Inc.’s Apple TV Channels already allows users to subscribe to select apps on an a-la-carte basis through their Apple IDs. But the warnings about the growth outlook require a bit of context: We’re talking about a business that increased revenue by 50% in the third quarter and is projected to do so again this quarter. A slowdown from that level would still be a dream for many corporations its size. “Roku reported a strong quarter for just about any company but Roku,” is how Alan Gould, an analyst for Loop Capital Markets, put it in a note to clients last month. Roku also added 1.7 million active accounts — that’s almost the same number of people who quit traditional pay-TV services such as Comcast’s Xfinity, AT&T Inc.’s DirecTV and Charter Communications Inc.’s Spectrum in the same period. And if Roku’s $16 billion market value shrank enough, an acquirer might just swoop in for the company and all those users and TV-manufacturer relationships.So things aren’t quite as bad for Roku as one might infer from Monday’s plunge. They really aren’t bad at all. But Roku’s the small fry in a land of giants, and even if it doesn’t get trampled, its lavish stock price will keep taking hits.To contact the author of this story: Tara Lachapelle at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Markets were hit hard in early Monday trading, as trade tensions spooked investors. Let's look at a few top stock trades as we enter the last trading month of 2019. Top Stock Trades for Tomorrow No. 1: Roku (ROKU)Source: Chart courtesy of StockCharts.comRoku (NASDAQ:ROKU) was down around 7% in pre-market trading thanks to a negative analyst note from Morgan Stanley. At 8 a.m. ET, not many were expecting the stock to be down 17% a few hours later.But that's exactly what we had, before shares erased some of those gains. While Roku was hammered on a day where the rest of the market was under pressure too, a 17% beating is not really a fair response given that nothing actually changed with the company.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo how do we trade it?The decline all but solidified $170 as resistance, but support came into play where it needed to. The 50-day moving average is near $132, while the 100-day is at $130. Not many expected Roku to go from $160 to $132-and-change in one day, but with Monday's bounce, support is doing its job. * 7 Entertainment Stocks to Buy to Escape Holiday Blues Below $130, though, the $116 to $120 area could be in the cards. Otherwise, let's see if Roku can fill some of this gap. Top Stock Trades for Tomorrow No. 2: Gogo (GOGO)Source: Chart courtesy of StockCharts.comOn tough market days, I love to look for the stocks showing relative strength. Unlike many in the market, Gogo (NASDAQ:GOGO) was positive throughout the session.On Friday, the 200-day moving average held as support, along with channel support (blue line). On Monday, the stock reclaimed the 100-day moving average. Now, bulls need to see the stock hold the $5.25 level and continue higher.If it does, look to see if Gogo can reclaim the 50-day moving average. Above puts $6-plus on the table and a possible retest of channel resistance. If it doesn't, $5 is back on the table. Top Stock Trades for Tomorrow No. 3: Bank of America (BAC)Source: Chart courtesy of StockCharts.comLike Gogo, Bank of America (NYSE:BAC) also displayed relative strength on Monday. In fact, BofA hit a new 52-week high.I have been waiting -- AKA hoping -- for a pullback in BAC stock, as its Q4 breakout has been very impressive. The stock continues to do an excellent job holding onto its recent gains, something many traders have surely noticed.$33 was resistance last week, but holding above it now puts $34-plus on the table. If it falls below $33, let's see if uptrend support and the 20-day moving average can buoy the name.If not, see if buyers step in around $32. Dropping below there could put the 50-day moving average on watch. If we get a real correction in the market, a retest of $30.50 to $31 would be attractive in BAC. Top Stock Trades for Tomorrow No. 4: Bristol-Myers Squibb (BMY)Source: Chart courtesy of StockCharts.comNot to beat the relative-strength theme to death, but Bristol-Myers Squibb (NYSE:BMY) was also on display Monday. Channel support (blue line) held throughout last week, and shares are now trying to push through $58.From here, the setup is straightforward. Either BMY reclaims $58 or it doesn't.If it does, it puts the 52-week high of $59.17 on the table, with channel resistance being the upside target above that. If Bristol-Myers can't reclaim $58, then channel support will again be called on. Should it fail, see if buyers step in near $55 again, while the 50-day moving average should act as support as well.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long GOGO and ROKU. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Things to Watch for into 2020 for Safer Income & Growth * 7 Entertainment Stocks to Buy to Escape Holiday Blues * 5 "Strong Buy" Biotech Stocks With More Than 80% Upside The post 4 Top Stock Trades for Tuesday: ROKU, GOGO, BAC, BMY appeared first on InvestorPlace.
When your holiday shopping is full of high-tech requests, it's not hard to imagine your wallet taking a beating. However, no-one wants to be dealing with a post-holiday financial hangover in January, when those credit card bills start arriving. * 10 Buy-and-Hold Stocks to Own Forever To help you stay within budget, we've put together a list of 10 great tech gifts, each of which costs less than $100.InvestorPlace - Stock Market News, Stock Advice & Trading Tips 10 Great Tech Gifts to Buy for Under $100: 1More Stylish True Wireless In-Ear HeadphonesSource: 1More True wireless earbuds are a hot gift category, thanks in no small part to the success of Apple's (NASDAQ:AAPL) AirPods.You can get great audio, excellent battery life and a comfortable fit from 1More's Stylish true wireless in-ear headphones. I reviewed these buds earlier this year and for under $100, they are a good value. With up to 6.5 hours of use on a charge (24 hours total including the charge case), they go for longer without needing to be recharged than AirPods, and 1More offers them in a choice of colors: black, gold, mint green and pink. Amazon Kindle Fire HD8 TabletSource: Amazon You are not going to get a cutting edge tablet for under $100. But you can get a pretty decent one in Amazon's (NASDAQ:AMZN) Fire HD 8. The 16GB version is priced at $94.99, or $79.99 with special offers (advertising). * 10 of the Best Stocks to Buy Right Now From the JUST 100 List For that price you get a tablet that's easily held in one hand, with an 8-inch HD display, quad-core processor, 10-hour battery life and integrated hands-free Alexa. You don't have access to anywhere near the selection of apps available from Apple's App Store or Alphabet's (NASDAQ:GOOG, NASAQ:GOOGL) Google Play, but there are still thousands to choose from through Amazon. And the Kindle Fire HD8 works perfectly well for web browsing, streaming video and reading e-books. Google Nest MiniSource: Google The $49 Google Nest Mini is a great, affordable option if you want to give someone a smart speaker. Use Google Assistant voice commands from across the room to control streaming music, control compatible smart home devices or to ask for the weather forecast. The second generation Nest Mini has improved bass for better music playback, improved voice recognition and it can easily be wall-mounted. Its recycled fabric cover is available in a selection of colors, so it can match pretty much any home decor. Mujjo Double-Insulated Touchscreen GlovesSource: Mujjo Do you know someone who uses their smartphone a lot, and lives in an area where the winters get really cold? * 7 Things to Watch for into 2020 for Safer Income & Growth Mujjo's double-insulated touchscreen gloves are the warmest I've ever used, thanks to multiple layers of Micro Fleece, Thinsulate and a wind-resistant Micro Pique outer shell. They're very smartphone friendly with sticky Silicone grip lines and a conductive treatment that makes virtually all surfaces -- including the thumbs and palm -- able to operate a touchscreen. You can pick up a pair for about $55. ROKU Streaming Stick+Source: Roku If someone on your list would like to access streaming video services but their TV lacks built-in support, then the ROKU (NASDAQ:ROKU) Streaming Stick+ makes a great gift.Just plug the $49.99 stick into an HDMI port and connect it to Wi-Fi for access to ROKU's extensive channels, including Apple TV+, Netflix (NASDAQ:NFLX) and Disney's (NYSE:DIS) new Disney+ service. The Streaming Stick+ supports resolution up to 4K, as well as HDR. It also includes a physical remote control, with built-in voice search capability. Apple Arcade SubscriptionSource: Apple If there's a gamer on your shopping list and they use Apple gear -- an iPhone, iPad, Mac or Apple TV -- a subscription to Apple Arcade would likely be very well received. * 7 5G Stocks to Buy Now for the Future Apple Arcade has over 100 premium games, with no ads, and no in-app purchases required. If you choose a family subscription, up to six people get access. Apple Arcade costs just $4.99 per month, so a year of gaming comes in at under $60. Sega Genesis MiniSource: Sega Even with the PS4 and Xbox One due for replacement next year, game consoles are still relatively expensive.However, for just $79.99 you can pick up the Sega Genesis Mini. This 16-bit retro gaming console comes with two wired controllers and an HDMI cable for plug and play setup. It features 40 built-in classic Sega Genesis video game titles, including Golden Axe, Sonic the Hedgehog and Altered Beast. Anker PowerCore+ 20100 USB-CSource: Anker Anyone who's into tech can use a good power bank. There's nothing worse than having a battery run low and having to hobble along in power saving mode. * 10 of the Best Stocks to Buy Right Now From the JUST 100 List Anker has a reputation for making some of the best power banks, with premium quality and a lot of features for the money. The $69.99 Anker PowerCore+ 20100 USB-C has a big 21000mAh Lithium-Ion battery. That's enough to charge an iPhone XR five times, yet it's still within FAA regulations for bringing on an airplane. It also has USB-C output for the power to charge tablets and even a MacBook. Amazon Smart PlugSource: Amazon With a $24.99 Amazon Smart Plug, just about any device or small appliance gets "smart." When you plug something into the Amazon Smart Plug (like a desk lamp, for example) instead of directly into an electrical outlet, it can be turned on and off using Alexa voice control. It can also be programmed to turn on and off on a schedule. All that's needed is an Alexa-enabled device such as an Echo smart speaker, or the Alexa app on a smartphone. BioLite HeadLamp 330Source: BioLite BioLite is a very cool company that makes interesting high-tech gear like the CampStove that burns twigs to produce heat and generate power to recharge mobile devices. * 7 Entertainment Stocks to Buy to Escape Holiday Blues The $49.95 HeadLamp 330 is the company's high-tech take on the headband flashlight, and it makes a great gift -- even for someone who isn't specifically hoping for tech gifts. The lightweight, rechargeable HeadLamp 330 is very comfortable, sits flush against the forehead, can be adjusted to multiple angles and two brightness levels, and it goes for up to 40 hours on a charge. The HeadLamp 330 also comes in interesting colors, including Sunrise Yellow. As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Things to Watch for into 2020 for Safer Income & Growth * 7 Entertainment Stocks to Buy to Escape Holiday Blues * 5 "Strong Buy" Biotech Stocks With More Than 80% Upside The post 10 Great Tech Gifts to Buy for Under $100 appeared first on InvestorPlace.
Roku Inc's high-flying stock tumbled 15% on Monday after Morgan Stanley downgraded the video streaming company, warning that revenue and profit growth could slow next year. A major winner in the consumer shift away from cable television in favor of Netflix and other streaming services, Roku's stock has gained more than 300% in 2019, even after Monday's slump.
(Bloomberg) -- Roku Inc. slumped Monday after Morgan Stanley cut its rating on the stock and warned clients that revenue and gross profit growth may “slow meaningfully” next year.Shares of the streaming-video platform fell as much as 17% in New York, their biggest decline since Nov. 7. The stock has soared more than 350% this year amid what Morgan Stanley analyst Benjamin Swinburne referred to as “exuberance over all things streaming.” He downgraded the stock to underweight from equal-weight, becoming just the third analyst with a sell-equivalent rating on the shares, among 18 tracked by Bloomberg.With Roku’s valuation now exceeding both digital media players and even high-growth software-as-a-service companies, Swinburne sees the risk profile skewed to the downside. It will be “increasingly difficult to sustain the current premium,” especially as growth moderates, he said in a research note.To contact the reporter on this story: Ryan Vlastelica in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Catherine Larkin at email@example.com, Steven FrommFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
For those tuning in to Roku (ROKU) today, the stock is getting hammered. Following a downgrade from Morgan Stanley, the streaming player's shares have shed 15% of their value. As a result, some have been left wondering what prompted this show of bearish sentiment as Roku has soared 342% year-to-date thanks to increasing estimates and general excitement over all things streaming.Five-star analyst Benjamin Swinburne tells investors that his downgrade wasn’t spurred by Roku’s growth prospects, which he remains bullish on, but rather the risks that he doesn’t believe are built into the current share price.“We see the risk/reward skewed to the downside. Roku’s valuation levels have surged past digital media players and even past high-growth SaaS companies despite structurally lower gross margins,” Swinburne commented.Swinburne adds that it will be increasingly difficult to sustain the current premium as gross margins drop and gross profit growth moderates. To this end, the top-rated analyst lowered the rating to Underweight and set a $110 price target, indicating 20% downside potential from current levels. (To watch Swinburne’s track record, click here)So what does all this mean for Roku? Here’s the lowdown.The Risks Are UnderestimatedSwinburne argues that a correction with respect to share prices could be fueled by several key factors. First and foremost, faster-than-expected gross margin pressure could take a toll, which has already appeared as a trend evident in recent results and guidance.On top of this, the Morgan Stanley analyst points out that the market has underestimated the mounting risks with regards to account growth. According to Swinburne, Roku’s user acquisition has benefited materially from its partnership with one OEM in particular, TCL. For the first time since Q1 2017, active account net additions slowed year-over-year, with this trend likely to continue if there aren’t any new major OEM partners.Additionally, the competitive landscape is broader than some might think, going beyond streaming sticks to every smart TV, gaming consoles and connected set-tops from the likes of Comcast and AT&T’s Direct TV.The analyst also cites the advertising segment as a must-watch area of the business. “We think the law of large numbers for its high-growth advertising business will lead to decelerating growth, likely faster-than-expected. This has been the case with other emerging advertising businesses like Snap and Twitter, where rather than fade modestly, growth slowed dramatically, leading to de-rating,” he explained.The Rest of the Street’s Take Looking at the consensus breakdown, the Street’s take is more of a mixed bag when it comes to Roku. With 9 Buy ratings, 2 Holds and 2 Sells assigned in the last three months, the consensus is that the stock is a Moderate Buy. At an average price target of $143.67, the upside potential lands at 5%. (See Roku stock analysis on TipRanks) To find better ideas for stocks trading at fair value or better, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
If you didn't listen to Monday's PreMarket Prep Show, then you may be clueless as to why market is under selling pressure in today's session. The reason being on each and every broadcast we attempt to identify the potential catalysts that will drive the price action upcoming session. Morgan Stanley downgraded Roku Inc (NASDAQ: ROKU) to Underweight, which is the equivalent of a Sell rating, with a price target of $110.
Shares of the video-streaming tech firm have more than quadrupled so far this year, and Benjamin Swinburne downgraded Roku stock to Underweight from Equal-weight.
Roku Inc.’s stock surged more than 400% through the first 11 months of the year, but Morgan Stanley analyst Benjamin Swinburne is concerned that it’s about to head in reverse.
Roku Inc (NASDAQ: ROKU ) has traded up 400% this year on streaming hype. The market’s enthusiasm leaves one otherwise-bullish analyst cautious. The Rating Morgan Stanley analyst Benjamin Swinburne downgraded ...
Investing.com – Roku (NASDAQ:ROKU) shares fell sharply on Monday after Morgan Stanley sounded the alarm on the streaming media platform's valuation amid rising competition and slowing growth.
Some investments you intuitively understand because of their long, proven history. But others, typically those from the broader technology industry, may require you to get your hands dirty before you can truly appreciate them. I put Roku (NASDAQ:ROKU) firmly in this category.Source: AhmadDanialZulhilmi / Shutterstock.com Streaming may be difficult to understand for some Americans, especially those who have known only corded television. Moreover, the streaming industry throws out terminologies such as VSP, CDN, VOD, and OTT that may intimidate traditional TV viewers. Unfortunately, that's part of the growing pains associated with the ROKU stock price.For a long time, I only viewed Roku stock through purely "academic" terms. However, one day, I decided I had enough with paying for the ridiculous monthly charges for TV subscriptions. So I cut the cord and decided to go all in on ROKU.InvestorPlace - Stock Market News, Stock Advice & Trading TipsFolks, I ain't ever going back. * 7 Top Stocks to Buy for 2020 From every angle - convenience, finances, content - streaming TV is overwhelmingly superior to its corded predecessor. Personally, I consider Roku stock as an inverse spiritual investment to Uber (NYSE:UBER) or Lyft (NASDAQ:LYFT).One of the biggest reasons why ride sharing took off is that it allows people to profit from dormant assets. For instance, why drive just yourself to work when you can Lyft others and pocket some money?Well, streaming TV applies that same concept in reverse. Why pay for content that you're not going to watch and enjoy? Anecdotally, I'd estimate that at least 60% of the channels that came included in my TV subscription package benefited from my wallet but without my eyeballs.Thus, I'm not terribly worried about the sometimes-volatile Roku stock price. In the long run, streaming is the future of TV. The "Whys" of Traditional TV Bolster ROKU StockAny lengthy discussion about streaming TV or content providers will invariably invoke cord-cutting statistics. Indeed, this trend has left many media giants scrambling for answers. Typically, the strategy is to join forces with the movement.Of course, cord cutting doesn't bode well for companies heavily levered to pay TV subscription models. Still, a great many Americans continue to find reasons to stay the course with tradition. However, the real risk to pay TV isn't just cord-cutting; it's that the reasons to stay tethered are declining in relevance.Earlier this year, MRI-Simmons conducted a study researching in part the motivations of people considering traditional TV subscriptions. The most popular reason averaged among all demographics - segmented by 18-plus, 18 to 34, 35 to 49, and 50-plus -- is the ability to channel surf. The second most-popular reason was that they were offered good deals by TV providers.Interestingly, only three reasons (out of nine in the study) mentioned factors that are uniquely advantageous for pay TV: the ability to watch live news and live programming, and access to specific TV networks.Regarding live news, this factor will unlikely threaten the Roku stock price. According to the Pew Research Center, younger Americans overwhelmingly prefer social media as their primary news source.As far as live programming, this attribute is overrated, at least among the younger, more relevant generation. Based on a Morning Consult/Hollywood Reporter poll, 60% of adult viewers stated that they binge-watched their favorite shows. That's not possible with live programming.Finally, network access is the last holdout for some traditional TV channels. However, with another Pew report noting that 61% in the ages 18 to 29 bracket prefer streaming services, any holdouts won't last long.Most importantly, all these trends are moving positively for ROKU stock. Not Entirely Without RiskAlthough TV consumption trends favor ROKU, they also benefit its competitors. Namely, the biggest risk factor, especially for this holiday season is Amazon (NASDAQ:AMZN) and its Amazon Fire TV Cube.Unlike your typical over-the-top device, the Fire TV Cube is a comprehensive entertainment system. Featuring all the goodies associated with high-quality streaming, Cube's signature attribute is its intuitive voice recognition system. Rather than deal with clunky remote controls, you can talk your way to your favorite content.Despite Cube's tech wizardry, though, it does have one critical drawback: price. In contrast, ROKU's platform offers myriad choices, with the cheapest coming in at $30. Thus, anyone that doesn't require the absolute best in streaming equipment have ready-made solutions with ROKU.Ultimately, I'm looking at the company as a buy-on-the-dips opportunity. While shares may be a little bit overheated right now, anything around the 50-day moving average (approximately $130) represents a confident entry point.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Sickly Healthcare Stocks to Avoid * 5 Lottery Stocks With Huge Upside -- And a Real Chance of $0 * 7 Top Stocks to Buy for 2020 The post ROKU Renders Traditional TV Models Pointless appeared first on InvestorPlace.