Roku Gets Price Target Lift from D.A. Davidson

Roku shares have hit an all-time high recently and they may head even higher according to one analyst.

Roku announced the addition of Activation Lights to its over-the-top advertising tools, Ad Insights Suite, and this may “serve as a catalyst” for the company’s advertising sales and boosts the near-term and long-term outlook, said D.A. Davidson.

D.A. Davidson analyst Tom Forte has raised his price target on Roku shares from $92 to $110 and reiterated a “buy” rating.

According to Forte, the advertising solution provides data analysis on consumers, enabling advertisers to maximize returns on investment from advertising on Roku’s platform.

Forte also said that the addition of Activation Insights gives the company a chance to benefit from the shift in television advertising spend toward over-the-top and away from linear television.

The analyst has also raised his FY20 revenue projection to $1.41B from $1.36B.

According to Roku’s recent press release, Activation Insights is a powerful new tool to target audiences that have shifted to OTT. The capability combines a comprehensive review of a brand’s linear TV campaign performance, with an analysis of the potential OTT audience missed and the optimal budget spend on the Roku® platform.

“Smart marketers are significantly increasing investments in OTT to reflect the dramatic shift to streaming,” said Scott Rosenberg, SVP and GM, Platform Business, Roku. “By adding the ability to tie advertising performance on linear with a specific audience that advertisers can gain on OTT, we are addressing a long-standing industry challenge for OTT media planning. We believe it’s no longer a question of when advertising budgets will shift to streaming but how much.”

The press release went on to say that according to Magna Global, OTT accounts for 29 percent of TV viewing but so far has only captured 3 percent of TV ad budgets. Roku provides significant scale and reach to help advertisers catch up to where consumers already are. Additionally, Roku offers advertisers some of the most advanced tools in OTT to deliver more effective, targeted and measurable campaigns.

Many analysts are bullish on Roku, with nine of 16 maintaining a “buy” or better rating.

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