Yahoo Finance Live discusses a rise in Roku stock following a rating upgrade from Susquehanna analysts and details positive trends impacting the stock price.
Video Transcript
- Moving on to my play, it is Roku. Shares are moving to the upside today, up about 3.5%, jumping on the heels of a new upgrade at Susquehanna. Analysts boosting shares to positive from neutral, writing, quote, "long-term drivers remain in play, while near-term business fundamentals appear to be bottoming." Those long-term drivers include continued success in the connected TV market, with Roku also benefiting from the secular shift of linear budgets. Susquehanna also noting the opportunity for this company is still in front of them, although there are persistent risks in the ad market, at least in the short term.
We heard from media investment company MAGNA slightly cutting their growth forecast for 2023 US advertising to 3.4%, down from the prior 3.7%, given those macroeconomic challenges that we've seen. But MAGNA did point out that there are some positive trends, especially around ad-supported streaming, the recovery of the auto industry, with Susquehanna also predicting an improvement through the current quarter after a tough end to the year. So guys, it seems like the word on the street here is that Roku is in a solid position to really balance those risks versus the potential rewards.
- Really curious to see how these televisions have done. This is the first time when we have the upcoming quarterly numbers that we'll get to see a glimpse at their own TVs that they are now selling in Best Buy, both ranges. There's the low end, the small TVs, all the way up to the big dogs, to $1,200.
And what you're hearing out there in the market is two weeks after they debuted at CES in January, they were already dramatically marked down inside Best Buy stores, giving you a pretty good glimpse at the lack of demand. Probably really bad timing, guys, to debut a television in January, with consumers beginning to cut back. So I'll be curious to see how that impacts the upcoming earnings. Doesn't look like a positive impact.
- No, it doesn't make a positive impact at all, especially because the expectations for that equipment, for some of the product innovations that they have been unveiling over the last couple of months were part of the why some of the other analysts on the street had upgraded Roku over the last several weeks. Bank of America last month, I believe, issued a double upgrade for this stock. They were bullish in part here because of the product diversification and what they were putting out here on the market.
So if that doesn't hold up, we could see maybe potentially a couple of downgrades. But I don't know, Roku is one of those names, it is-- there is certain reason to be optimistic, given the weakness that we had seen in the name. But even those ad numbers there, yes, we are starting to see our expectation here for growth in the second half of the year, but only at 3.5%, which I think you can view as slightly disappointing, in some aspects.
- It did get the TV out right before the Super Bowl, so perhaps--
- OK, maybe some people--
- --there was a boost there.
- --did some last-minute purchases.
- And that's always a smart move.
