Roku IPO The New Rocket Man $ROKU Launches 61% on Debut

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Roku $ROKU surges higher after Needham raised Price target

Needham analyst Laura Martin reiterated her buy rating and raised her price target to 50 from 28.

Roku shares close today NASDAQ: ROKU · November 27, 4:19 PM EST 46.52 ▲ 7.05 (17.86%)

Martin gave five reasons for her upbeat outlook on the stock:

Attractive valuation, strategic positioning, active user growth, expanding average revenue per user and profit margins, and a rising competitive moat.

“Like Netflix (NFLX), we view Roku as a pure play on over-the-top (OTT) TV-viewing growth, but Roku has no content risk. Recent announcements and press reports that Disney (DIS), Alphabet (GOOGL), Amazon (AMZN), etc., are launching new OTT services helps Roku but hurts Netflix.”

Martin now expects Roku to hit break-even on an adjusted basis in the third-quarter of 2018, one quarter earlier than her prior projection.

“Roku’s engagement lengths are hours per day per user, well above any internet company, suggesting higher monetization potential per user,” Martin said. “Also, as linear TV viewership falls, it is easy for brands to use their existing 30-second TV spots on Roku to follow younger audiences to OTT.”