California-based Roku (NASDAQ: ROKU) provides a streaming-content platform. I am bullish on the stock.
Tracking analysts’ opinions on your favorite stocks can help improve your overall performance in the financial markets.
However, it’s also important to understand why Wall Street’s experts are bullish or bearish on a particular stock, and to form your own conclusions.
As ROKU stock has slipped from $480 to the $230s, prospective shareholders must decide whether this is a terrific half-price deal, or a toxic asset to avoid.
With that in mind, let’s check on the latest developments surrounding Roku, as well as some recently issued opinions from Wall Street’s best and brightest.
Good News, Bad News
In the past few weeks, there have been a pair of important developments which could send the ROKU share price higher or lower.
First, let’s start with the good news. After months over accusations of anti-competitive conduct, Roku and YouTube, which is owned by Alphabet’s (NASDAQ: GOOGL) Google, have finally announced an agreement.
Roku and Google “have agreed to a multi-year extension for both YouTube and YouTube TV,” according to the two companies.
As a result, YouTube and YouTube TV will be available for all streamers on the Roku platform. So, at least the public feud between Google and Roku, which had been going on since April, has come to a positive resolution.
Now, for some bad news. Reportedly, Universal Electronics (NASDAQ: UEIC) scored a victory in a patent infringement case against Roku.
The United States International Trade Commission (ITC), according to Universal, has banned Roku from importing infringing “televisions, set top boxes, remote control devices, streaming devices and sound bars.”
On the other hand, Roku is still allowed to import items, provided that those items don’t infringe on Universal’s patents. Therefore, it’s not entirely bad news.
More Varied Stock Performance
As you might expect, the negative ITC-related news has swayed the opinion of at least one prominent Wall Street expert.
Benchmark analyst Daniel Kurnos, for example, expects that ROKU stock will trade lower on the ITC news. However, Kurnos believes that the financial impact to Roku may be limited in scope.
Kurnos maintained a Buy rating and a price target of $525 on the stock, so evidently the ITC’s ruling didn’t bother him too much.
JPMorgan analyst Cory Carpenter is less optimistic. While maintaining the equivalent of a Buy rating, Carpenter nonetheless issued a reduced price target on ROKU stock, lowering it from $435 to $315 and bracing investors for “more varied stock performance to continue.”
Additionally, Morgan Stanley analyst Benjamin Swinburne lowered his price target on ROKU stock from $295 to $190, while maintaining the equivalent of a Sell rating. Apparently, Swinburne is concerned about further risk to Roku’s Platform segment gross margins.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, ROKU is a Moderate Buy, based on 16 Buy, two Hold, and two Sell ratings. The average Roku stock price target is $362.11, implying 56.4% upside potential.
The Takeaway
As you can see, various analysts have different opinions about ROKU stock. That’s perfectly normal, and investors should weigh all opinions carefully.
There’s good news and bad news surrounding Roku, and this paints a complex picture of the company’s growth prospects.
Still, the share-price decline from $480 to the $230s seems overdone.
Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates Read full disclaimer >
