Roku Spikes to Record High After Another Blowout Quarter

(Bloomberg) -- Roku Inc. shares soared on Thursday, with the platform for streaming video extending a move into record territory in the wake of its better-than-expected results.

The rally is the latest leg up for a stock that has already seen massive gains over the past several months. While some analysts expressed some trepidation over Roku’s valuation, the broad reaction to the print was widely positive. Rosenblatt upgraded its view while multiple firms boosted their price target by hefty percentages. Currently, the average target on Roku stands around $111, up from $88 on Wednesday, according to data compiled by Bloomberg.

The stock gained as much as 22% to an intraday record and is up more than 340% from a September low.

Here’s what analysts are saying about the results:

Rosenblatt Securities, Mark Zgutowicz

Upgrades to buy from neutral, price target raised by more than 70% to $134 from $77.

This is the second straight quarter where Roku achieved the “trifecta” of strong growth in accounts, hours and average revenue per user.

“While Amazon will always be an imminent threat, Roku TV is a runaway train,” and its brand positioning should continue to snowball. “ROKU’s brand and audience reach is essentially ‘out-scaling’ the unowned content model.”

RBC Capital Markets, Mark Mahaney

Revenue was “significantly” better than expected and it “cleanly” raised its full-year outlook. Fundamentals “were mostly positive,” but valuation remains a concern.

Sector-perform rating, price target raised to $107 from $90.

Macquarie, Timothy Nollen

The company could have as many as 72 million international subscribers in three years.

Price target lifted to $110 from $66, but neutral rating affirmed due to valuation.

Needham, Laura Martin

Given the company’s growth in active accounts, “it would be foolhardy to try to launch a new [over-the-top] service without Roku, which should drive pricing power.”

New streaming services from Disney, Apple, and Warner Bros. can drive value through new subscribers and ad revenue.

Buy rating, $120 price target.

William Blair, Ralph Schackart

As streaming video takes over for traditional television, “Roku is well positioned to take advantage.”

Outperform rating. The valuation “leads us to believe there is upside to $145 through the next 12-18 months.”

What Bloomberg Intelligence Says:

“Roku is capitalizing on favorable over-the-top video-streaming trends,” and “there is room for growth as Roku broadens its ad platform.” The outlook “remains conservative.”

-- Analyst Woo Jin Ho

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To contact the reporter on this story: Ryan Vlastelica in New York at rvlastelica1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will Daley, Morwenna Coniam

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