Following the release of its first-quarter financial results on Thursday, Roku, Inc. (ROKU) experienced a decline in its share price as analysts lowered their price targets for the company.
Despite surpassing expectations for platform revenue and EBITDA, investors indicated a desire for more compelling indicators, prompting analysts to revise their projections.
Wedbush analyst Michael Pachter maintained an Outperform rating for Roku but reduced his price target from $80 to $75. He acknowledged significant growth opportunities for Roku’s business and its dedication to profitable expansion. Pachter emphasized Roku’s achievement of positive annual EBITDA in 2023, one year ahead of schedule, and its path to surpass $100 million in annual EBITDA in 2024. He anticipates further acceleration beyond that point.
Pachter highlighted Roku’s continued market share gains as advertising expenditure shifts from traditional linear TV to digital-connected TV (CTV). He also noted Roku’s growing presence in newfront ad bookings, the expansion of its advertising inventory, and its recent benefit from the rebound in scatter demand and pricing.
Additionally, Pachter drew attention to Roku’s expansion beyond its OneView platform by opening up to other demand-side platforms (DSPs) to drive advertising growth. He also emphasized the potential revenue boost from the company’s focus on curated sports pages in the near and long term.
Piper Sandler analyst Matt Farrell reiterated a Neutral rating for Roku and reduced his price target from $81 to $65. While acknowledging Roku’s better-than-expected first-quarter platform revenue and EBITDA, he noted that investors are seeking stronger indicators. Farrell highlighted that platform revenue acceleration is not anticipated until 2025, and that sales and marketing expenses in the second half of the year will impact EBITDA.
Benchmark analyst Daniel Kurnos maintained a Buy rating for Roku but lowered his price target from $115 to $105. He emphasized Roku’s strong position in the market, despite concerns about disruption from competitors such as Walmart Inc. (WMT), VIZIO Holding Corp. (VZIO), and Amazon.com Inc.’s (AMZN) ad-supported platform.
Oppenheimer analyst Jason Helfstein reiterated a Perform rating for Roku. While acknowledging the positive impact of programmatic integrations, he expressed concerns about revenue headwinds due to challenges in SVOD advertising and the media and entertainment industry.
JP Morgan analyst Cory A. Carpenter maintained an Overweight rating for Roku but lowered his price target from $100 to $90. He emphasized Roku’s potential to overcome challenges and re-accelerate platform growth through expanded partnerships with third-party DSPs and the ongoing shift of advertising dollars from linear to streaming platforms.
At the time of writing, ROKU shares had declined by 9.8% to $56.65.
