Shares of Roku were rising in premarket trading Thursday after one analyst raised his rating and price target on the stock, saying the streaming media player will continue to benefit from the “rapid pace” of growth in the connected television advertising marketplace.
Michael Morris, an analyst at Guggenheim, lifted his rating on Roku (ticker: ROKU) to Buy from Neutral with a price target of $395. Roku shares were up more than 3% early Thursday to $335.
The stock has gained more than 82% over the past 12 months, but has fallen 2.2% year-to-date.
Morris wrote in a research note that he expects “the connected television ad marketplace will continue to grow at a rapid pace and that Roku will be a primary beneficiary — this view is unchanged.” He also said Guggenheim sees value “in the company’s incremental international expansion, potential for additional targeted marketing partnerships and expanded advertising tools as underappreciated.”
He said the stock’s current level was an “attractive entry point” for investors.
Twenty-seven analysts surveyed by FactSet have an average rating on Roku shares of Overweight and an average price target of $483.09. The stock’s 52-week high, reached in July, is $490.76.
Roku reported better-than-expected earnings and sales during its fiscal second quarter, but it also posted a drop in streaming hours as Covid-19 restrictions relaxed.
Streaming hours in the second quarter of 17.4 billion were down 1 billion hours from the first quarter, and well below analysts’ estimates.
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