Shares of media streaming platform Roku (ROKU) – Get Report rose pre-market Monday after the company received a bullish note from Bank of America that put a Wall Street-high price target of $500 on the company.
Bank of America maintained its buy rating while raising Roku’s price target to $500 from $380 per share.
“Our Buy thesis is based on: 1) Competitive threats are overblown, in our view, 2) Roku’s unique position as a
neutral player with a large installed base should allow it to
continue gaining market share as streaming services compete for subscribers, 3) Roku should continue to
benefit from growth of affiliated smart TV vendors that utilize the Roku TV OS, and 4) Roku continuously gains
brand recognition in streaming players, allowing it to effectively compete against larger companies,” wrote analyst Ruplu Bhattarcharya.
The firm says Roku’s deal to acquire the rights to content from defunct, short form video streaming company Quibi shows that the company is focused on content.
Bhattarcharya and Bank of America expect between $150 million and $200 million in incremental annual advertising revenue from the Quibi deal, while also saying that Roku likely paid less than the $150 million it paid for its prior acquisition of adtech platform DataXu.
Roku announced at the end of 2020 that it has 51.2 million active accounts, which was ahead of Wall Street estimates. Roku saw 39% year-over-year growth in active accounts in 2020, an increase over the 36% growth the company saw in 2019.
Roku shares were rising 2.2% to $432.05 in premarket trading Monday.
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