Roku Has Just Been Named This Analyst’s Top Pick for 2019

Needham analyst Laura Martin is feeling very bullish about streaming device maker Roku. The analyst has called the stock her “top pick for 2019.”

She rates Roku a “buy” and has a $45 price target on the stock.

News of Martin’s bullish sentiment towards the company had traders cheering, sending shares of the stock up nearly 12% on Wednesday.

According to the analyst, Roku’s strategic position in the fast-growing over-the-top internet television market is one reason why she likes the company.

“Engagement lengths are highly correlated to revenue and Roku now commands nearly 3 hours/day/household of users’ viewing,” she wrote in a note. She noted that about 10% of U.S. TV viewers age 18 to 34 are now on Roku and 10 million of its users do not have a linear TV bundles, meaning advertisers can only reach them by buying Roku ads.

“The best way for an advertiser to reach these consumers is to buy ads on Roku,” she said. “As viewers cut the cord, advertisers must follow viewers to platforms where they spend time.”

Martin also said, “Roku is becoming broadly accepted by large TV ecosystem companies as an integral cog in the streaming/OTT future.”

Recently KeyBanc analysts also recommended the stock and wrote, “Roku has corrected from trading at a premium to its peer group to a discount, despite consensus estimates moving higher post 3Q earnings. This sell-off (outside of the tech-pocalypse) has been driven by a smaller and lumpy component of the platform business, and noise around its TCL partnership, both of which we view as overdone.” The analysts did however lower their price target from $81 to $59.

Roku sells set-top boxes and dongles for users to access internet video services such as Netflix and Hulu.

Disclaimer: We have no position in Roku Inc. (NASDAQ: ROKU) and have not been compensated for this article.