Two months ago after Q1 '23 earnings, Bank of America put ROKU back on the Buy list with a $85 price target. That implies ~38% upside. They mentioned a few items for the investment thesis:
- performing better than the broader advertising market which remains weak (shows the strength of the platform)
- ad spending across some verticals is bottoming out (restaurants, travel, CPG, and health & wellness) and should improve through the course of the year
- new partnerships with media networks and DSPs can improve access to advertisers
- Street modeling C1Q/CY23 net adds of less than 1mn & 7.2mn (these have not been this low since 2017) despite Roku now in more geographies
- gaining share in smart TVs and expected benefit from launch of ROKU branded TVs to drive higher subscriber-growth
- new rev streams will likely start to contribute with smart home initiatives (cameras, doorbells etc.) and shoppable ads
- OpEx control is a priority, with Mgmt. indicating a material decline in OpEx growth (from 40% y/y in Q1 to single digit growth by Q4) and positive EBITDA for FY2024,
- est revisions should be positive post Q1 as macro improves and compares get significantly easier.
ROKU has their next earnings call soon on 4/26 so what does everyone think?
[link] [comments] https://www.reddit.com/r/stocks/comments/12naong/roku_is_up_50_this_year_what_do_you_think_happens/
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