Analyst Raises Roku Price Target Despite Increasing Competition

roku price

Guggenheim ups Roku price target…

Roku stock has performed very well this year, increasing by more than 350%. In its second-quarter earnings report, released in August, the company touted impressive earnings, user growth, and revenue numbers.

While the video-streaming company has already had a very successful year, Michael Morris, an analyst at Guggenheim Securities, believes Roku stock will continue to rise.

On Wednesday, Morris reaffirmed his ‘buy’ rating for Roku and increased the company’s price target to $170 from $119.

Morris wrote, “As the company expands its international offering and numerous new streaming video services launch with global growth ambitions, we see under-appreciated opportunity for the company to drive significant economic growth and create value for shareholders. We are raising our 12-month price target to $170 from our prior $119 and maintaining our BUY rating with the change largely reflecting our updated international business valuation.”

Growth in 2019

Roku has experienced significant growth so far in 2019. Some highlights from the company’s latest earnings report include:

  • $250.1 million in total revenue, up 59% year over year
  • $167.7 million in platform revenue, up 86% year over year
  • 9.4 billion streaming hours, up 72% year over year
  • $114.2 million in gross profit, up 47% year over year
  • 30.5 million active accounts

Roku attributes much of its growth to monetized video ad impressions and the company’s ability to attract customers without traditional cable.

New Competition

Roku has had an incredible year … but competition in the video-streaming hardware industry is increasing.

While Roku already faces competition from companies like Microsoft, Google, Amazon, and Apple, streaming devices from other major companies are entering the market.

On Wednesday, Roku stock fell nearly 10% due to the emergence of new competition from Comcast and Facebook.

Comcast

Comcast announced on Wednesday that its Xfinity Flex streaming device will now be included with Xfinity internet-only subscriptions at no extra charge.

Like Roku streaming devices, Xfinity Flex will let customers access streaming services like Netflix and HBO, plus a variety of other apps.

Executive vice president of Xfinity Services Matt Strauss stated, “Today’s Internet customers need more than speed — they want wall-to-wall WiFi coverage, simplified control of their connected home, and the best streaming experience. With Xfinity xFi and Xfinity Flex, we are including all of that and more with our Internet service, all in one place, on the best screen in the home.”

Customers with Xfinity Flex will also get access to Peacock, NBCUniversal’s new streaming service launching next April.

Facebook

Facebook is also entering the streaming industry. The company recently announced a new version of its Portal device.

These new devices will include television chat, video streaming, and AI capabilities. While the first generation of Portal devices were scrutinized due to Facebook privacy concerns, the company has indicated that users can choose not to send their data to Facebook.

For now, Portal can only stream a select few applications, including Amazon Prime Video, Facebook, Spotify, among others. The device currently lacks access to certain popular services, like Netflix or the upcoming Disney+ streaming service.

While Facebook’s Portal doesn’t match the selection of apps offered by Roku devices, it’s still another addition to the already crowded streaming industry.

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