Shares of streaming player manufacturer Roku (NASDAQ:ROKU) saw its shares climb after receiving an upgrade from Oppenheimer.
Oppenheimer analyst Jason Helfstein has upped his rating on the stock from “perform” to “outperform” and has forecasted that the stock will see 15% upside over the next 12 to 18 months.
According to the analyst, he sees the stock experiencing a comeback as the company begins to leverage its role as one of the leaders in providing over-the-top television.
Helfstein believes the company’s homegrown Roku Channel may add to the 21 million or so customers it has in the U.S. and could capture $19 billion in revenue potential.
The analyst wrote, “The rapid adoption of The Roku Channel gives us incremental confidence in the channel’s ability to garner viewership on other platforms, such as Samsung, allowing Roku to monetize a broader portion of the OTT ecosystem than we had previously assumed was possible,” Helfstein wrote. Roku should be able to wield “its advantages in pricing and merchandising to remain the market leader in consumer-facing connected television solutions.”
He also wrote, “Roku’s business today is generating users for the Roku platform, either on a Roku Player or the Smart TV Roku OS, and monetizing its partners’ content, either by taking a share of subscription video on demand/advertising video on demand revenue or selling subscription video on demand advertisements itself and sharing the revenue with its partners.”
Helfstein has a $50 price target on the stock. Shares saw an increase of a little over 5% on the upgrade and price target.
It was in May that Roku had reported better-than-expected first-quarter financial results. For the quarter, the company reported a loss per share of 7 cents, excluding items. Analysts had expected 15 cents a share. Revenue was reported at $136.6 million. Analysts on the contrary were expecting $127.6 million.
CEO Anthony Wood stated on the earnings call, “We kicked off the year with another great quarter, active accounts were up 47% and gross profit was up 62%. The transformation of TV from legacy TV to [indiscernible] streaming pace 2.37 but has a long way to go. Consumers are moving from traditional pay TV services to Internet deliver services. Roku is building a large audience for content providers and advertisers and aggregating streaming services for consumers. We have a leading TV screening platform in the U.S. with nearly 21 million active customers.”
He also said, “The Roku (NASDAQ:ROKU) OS is the number one licensed TV OS and Roku TVs are in aggregate the number two best-selling smart TV in the United States and we’re growing fast.”