Roku Shares Head Higher on RBC Upgrade

Shares of streaming device maker Roku continued to head higher on Thursday after RBC analyst Mark Mahaney upgraded the stock.

Mahaney upgrade shares of Roku from “sector perform” to “outperform” and says that he sees the stock as more attractive now since it has fallen roughly 31%. In the past month shares have fallen 19%. He increased his price target from $107 to $155.

The analyst wrote, “We believe the Crucial Combo (revenue growth + EBITDA margin) is key in helping to determine fundamental attractiveness in the small-cap ‘net sector, and Roku has consistently had one of the highest scores in our coverage.”

He added, “We view Roku as one of the best derivative plays off of one of the strongest trends in ‘net land: over-the-top/streaming, with the company being one of the best-positioned to take share of the very large, underpenetrated $70 billion TV ad spend opportunity.”

Shares of Roku were also soaring on Wednesday after a Macquarie analyst predicted that Roku would triple its user base by the year 2022.

Macquarie analyst Tim Nollen has predicted that the company will experience significant overseas growth and said the company could benefit from “powerful growth” in connected TV devices and advertising. According to Nollen, Roku could experience Netflix-like growth overseas.

Nollen projects Roku could reach 72 million users in 2022, up from the 30.5 million active users it reported in the second quarter.

“We know little about the international roll-out plans, or costs beyond this year, which we assume will rise as marketing demands emerge,” said the analyst. “Roku’s growth trajectory internationally could well echo that of Netflix’s, which has also tripled over the past 3 years.”

The firm upgraded Roku shares to outperform from neutral and increased the price target to $130 from $110.

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