Wedbush has revised its price target for Roku (ROKU, Financial), bringing it down from $125 to $100, while maintaining an Outperform rating. This adjustment aligns with Roku's strategic emphasis on profitable expansion, as highlighted by its financial projections for 2024 and 2025, and a positive operating income outlook for 2026.
The firm anticipates that potential tariff impacts on Roku-branded and licensed TV sales in the U.S. will be mitigated through international expansion, price reductions on Roku products, and increased ad revenue. Americans are likely to seek less expensive alternatives amid elevated TV prices, which will drive demand for Roku's more affordable streaming options.
Additionally, Wedbush predicts that Roku (ROKU, Financial) will continue to capture greater market share as advertising budgets transition from traditional linear TV to connected TV. This shift is particularly crucial in optimizing limited budgets in 2025, providing an opportunity for Roku to expand its advertising capabilities and options for advertisers. Overall, the firm remains optimistic about Roku's growth trajectory and market position.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 28 analysts, the average target price for Roku Inc (ROKU, Financial) is $92.76 with a high estimate of $130.00 and a low estimate of $55.00. The average target implies an upside of 41.17% from the current price of $65.71. More detailed estimate data can be found on the Roku Inc (ROKU) Forecast page.
Based on the consensus recommendation from 34 brokerage firms, Roku Inc's (ROKU, Financial) average brokerage recommendation is currently 2.3, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Roku Inc (ROKU, Financial) in one year is $93.94, suggesting a upside of 42.96% from the current price of $65.71. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Roku Inc (ROKU) Summary page.
ROKU Key Business Developments
Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Roku Inc (ROKU, Financial) reported a strong fourth quarter with a 25% growth in platform revenue, driven by strategic use of their home screen and increased ad demand.
- The company expects continued growth in 2025, forecasting a 16% year-over-year increase in platform revenue for Q1 and a 12% growth for the full year.
- Roku Inc (ROKU) has surpassed 90 million streaming households globally, with significant growth in both the US and international markets.
- The advertising segment performed exceptionally well, with unique ad units and strategic partnerships contributing to strong results.
- Roku Inc (ROKU) is making strides in international expansion, particularly in the Americas and the UK, with a focus on scaling streaming households.
Negative Points
- Device revenue and gross profit were impacted by excess inventory and pricing pressures during the holiday season, affecting Q4 results.
- The company anticipates a 100 basis point decline in platform gross margin for 2025 due to adjustments, although margins are expected to stabilize.
- Roku Inc (ROKU) faces challenges in forecasting political ad revenue due to its unpredictable nature, despite strong performance in the recent cycle.
- There is a potential risk from tariffs, although the company believes the impact will be minimal due to diversified manufacturing.
- The subscription business, while growing, is seen as an area where Roku Inc (ROKU) is behind competitors, indicating room for improvement.
