Roku stock cut to Sell at Moffett, which slashes price target to $220
MoffettNathanson is downgrading $Roku Inc (ROKU.US)$ to Sell from Neutral as it lowers its estimate for video advertising revenue.
It also cut its price target to $220 per share from $330, a little more than 20% below current levels.
Roku is down 3% before the bell.
"To better assess our video advertising estimates, we attempt to break out the Roku Channel from third party advertising revenues on the platform," Michael Nathanson writes in a note. "We benchmark the Roku Channel against AVOD competitors Pluto and Tubi, and estimate Roku's take of ad revenues from major AVOD services on its platform."
"However, we are left with a large and fast growing portion of unidentifiable ad revenues coming from the long tail of third party services on Roku," he says. "We believe viewership, and ad spending, will consolidate among the leading streaming services. As such, we are lowering our 2025 total video advertising estimate by -24% reflecting slower anticipated ad growth from the long tail of third party services on Roku."
He is lowering the overall revenue estimate for 2025 by 17%.
Roku will still need to keep investing in content and engineering resources to compete, he adds.
"We do not anticipate meaningful margin leverage in the out-years (GAAP EBITDA margins remaining in the low double digits over 2021-2025)," Nathanson says. "As such, Roku is trading at around 40x 2025E GAAP EBITDA, the highest among our Internet coverage group and around double the valuation multiples of $Snap Inc (SNAP.US)$, $Twitter (Delisted) (TWTR.US)$ and $Netflix (NFLX.US)$."
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Jazzxin : Ok
Salanne : Hjskq
wild horse : so investors will bail for 20 points of downside now? this name probably bounces 30 points next few days/.
Milenko : I bought some today. It's a product I tend to use often and I can see the appeal.
T_shares : Truist Securities Adjusts Roku's Price Target to $360
so avg of the 2 is PT $290 .... $300 better
EEC6iRWd4p : Massively over valued...
TvhXCjkODq EEC6iRWd4p : lets suppose u re right and roku is way overvalued.
let’s say it should be a 15 bn market cap company..
why the hell amzn and google would like to enter in a sector where the market leader it’s just a 15 bn market cap???
vYcu5FgULx : B-b-b-buying opportunity!
KHVgqUvpZS : The boy scored a hit on a down day at support, good boy,
rARVOf0f5Z : This is absurd. The stock was already about 40% down from recent highs. Roku has had over 50% annual revenue growth for years, has a long runway ahead and is now priced at a forward EV/S of 8.
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