JP Morgan analyst Cory A. Carpenter has raised his estimates for Roku, Inc. (ROKU) ahead of its third-quarter earnings report, signaling a bullish outlook for the streaming giant. Carpenter’s optimism is fueled by recent positive trends in the streaming market, particularly the stable macro environment and robust political advertising spending. He believes these factors, combined with the contribution of the Olympics, will drive strong platform performance for Roku in the coming quarters.
The analyst has increased his third-quarter platform revenue estimate from 9% year-over-year to 11%, and from 11% to 12% for the fourth quarter. Despite this growth, Carpenter maintains his adjusted EBITDA estimates at $45 million for the third quarter and $25 million for the fourth quarter, reflecting the expected seasonality of device sales and marketing.
Carpenter expects Roku management to reiterate its forecast for accelerated platform revenue growth in the fourth quarter and throughout 2025. This positive outlook comes as Roku shares have already surged 40% since the second-quarter earnings report, outperforming the Nasdaq’s 6% gain.
Carpenter’s bullish stance stems from Roku’s strategic position within the evolving TV landscape. He views the ongoing shift to streaming as a significant opportunity for Roku, particularly its substantial advertising potential. The analyst anticipates Connected TV to emerge as one of the fastest-growing advertising mediums over the next 3-5 years, with Roku poised to be a major beneficiary due to its scale and strong user engagement.
Investors interested in gaining exposure to Roku can consider the ARK Next Generation Internet ETF (ARKW) and the ARK Fintech Innovation ETF (ARKF), both of which hold Roku shares in their portfolios.
At the last check on Thursday, ROKU shares were up 0.51% at $77.80.
