Roku lifted to a Street-high $410 after HBO Max deal

Roku shares are up more than 6% in Thursday trading.

“While largely the expected outcome, the order of operations, including the addition of Peacock first, was somewhat perplexing, with Roku clearly unwilling to budge especially in light of what we believe was a much stronger negotiating position,” Kurnos wrote. “While we acknowledge that a lot of the good news already appears to be priced into the stock, we still anticipate a significant upside surprise in 4Q, driven by advertising strength bolstered by material CPM [ad-pricing] improvement, which should flow through into 2021.”

Kurnos argued that Roku’s deals to carry AT&T’s T, -2.03% HBO Max and Comcast Corp.’s CMCSA, -0.35% Peacock service “are more meaningful than just the inventory they provide” because there was concern from bears that Roku’s negotiating leverage was shrinking. “While that may still be in the long-term cards, we have reduced both our [advertising-based video on-demand] and [streaming video on-demand] COGS [cost of goods sold] forecasts over the next 18 months based on beliefs around the deal terms and given commentary from lower-tier AVOD plays,” he continued.

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Roku shares have added 158% so far this year as the S&P 500 SPX, +0.38% has risen 15%.