Roku Inc ROKU announced downbeat guidance on Thursday, prompting a massive sell-off in the stock. Here’s what the Street has to say.
Morgan Stanley on Roku
Analyst Benjamin Swinburne maintained an underweight rating while reducing his price target from $50 to $45.
The company’s “earnings trends continue to deteriorate, but capital expenditures continue to grow,” the analyst said in a note.
“While the cyclical headwinds will eventually abate, visibility into the underlying earnings potential of this business remains low and distant,” he added.
Related Link: Roku Q3 Earnings: Streaming Platform Posts Revenue, Shares Hit on Outlook, Weak Ad Comment
Rosenblatt Securities on Roku
Analyst Barton Crockett downgraded Roku from buy to neutral while cutting his price target to $51 from $100.
“Roku had guided for 3% sales growth in 3Q22 to $700M and instead delivered a 12% increase to $761M, one of the best top-line growth rates for a publicly traded, ad-driven company so far this quarter,” the analyst said. “Adj. EBITDA was guided to a loss of $(75)M. Roku only lost $(34)M.”
While Roku is “presenting its gyrations as one with peers entering an ad recession,” some peers “are talking very differently and this uncertainty we believe warrants a step aside,” he said.
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Needham on Roku
Analyst Laura Martin reiterated a Buy rating while lowering her price target from $95 to $65.
Roku delivered strong active account growth and “delivered spin growth in 3Q22,” Martin said.
Still, the company’s fourth-quarter guidance, the CFO’s departure in 2023 after eight years with Roku and the weak macro trends are areas of concern, she said.
Wedbush on Roku
Analyst Michael Pachter reaffirmed an Outperform rating with a $75 price target.
“Roku faces various challenges in the near term, but most notable is reduced variable advertising spend,” Pachter said in a note. “Inflationary pressures have affected smart TV sales, but less than we had expected,” he said.
“Looking ahead beyond macroeconomic headwinds, we expect Roku’s user base to continue to grow globally, with expanding premium ad-supported content and superior targeting capabilities making Roku a compelling outlet for brand advertisers,” the analyst further wrote.
ROKU Price Action: Shares of Roku fell 7.82% to $50.07 on Thursday morning.
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