Looking internationally, analyst Ruplu Bhattacharya thinks Roku will need to build scale, drive engagement, and monetize its platform.
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Roku stock has doubled this year, but a BofA Global Research analyst still sees double-digit upside.
Pointing to Roku’s leadership in the U.S. and potential for international expansion in the coming years, analyst Ruplu Bhattacharya raised his price target for Roku stock (ticker: ROKU) to $310 from $260, maintaining a Buy rating.
Bhattacharya notes that Covid-19 has sped up a shift toward streaming—or over the top—media. With a second wave looming in the U.S., he expects people to spend more time at home in the near term. And even when a vaccine is readily available, Bhattacharya expects streaming hours will remain above pre-pandemic levels.
He also thinks Roku’s viewership data offerings, among other advertising programs, will help it attract a premium cost per mile, or CPM, from advertisers. CPM is a marketing term used to denote the price of 1,000 advertisement impressions on one webpage.
“Monetized ad impressions should continue to grow as the percent of ad spending on [streaming] continues to increase (only mid-single digit percent of the $70 [billion] in U.S. TV adverting is expected to have shifted so far to OTT, while streaming accounts for 25% of total TV usage),” he wrote.
Looking internationally, he thinks Roku will need to build scale, drive engagement, and monetize its platform, as it has done in the U.S. The company has introduced Roku televisions in Brazil and the U.K., while also increasing its market share in Canada in Mexico.
He also points to the top five markets for expected streaming-video-service user growth in 2020: Italy, Germany, France, Spain and the U.K., where he expects Roku to expand its presence. From there, he expects ad-based video on demand viewership and advertising spending to grow, to Roku’s benefit.
Roku stock was down 0.3% to $275.62 around midday Tuesday. The S&P 500 index was up 1.5%.
Write to Connor Smith at [email protected]
