J.P. Morgan analyst Cory A Carpenter raised his estimates for Roku, Inc. ROKU ahead of its third quarter results to reflect recent positive trends.
Also, the analyst of price target at $92 (instead of $90), with an overweight rating. The analyst expects Roku to deliver strong results on the platform thanks to stable macroeconomic and advertising trends, robust political spending and contributions from the Olympics.
As a result, the analyst increased the platform’s revenue estimate for the third quarter from 9% year-on-year to 11% and from 11% to 12% for the fourth quarter.
Other than that, adjusted EBITDA estimates remain unchanged at $45 million for the third quarter and $25 million for the fourth quarter, reflecting expectations that second-half adjusted EBITDA would be lower than the $85 million of dollars in the first half due to the seasonality of device sales and marketing, the analyst adds.
Carpenter also expects management to reaffirm its outlook for accelerated platform revenue growth in the fourth quarter and 2025. The analyst notes that investor expectations are high with Roku shares up 40 % since the second quarter results (compared to a Nasdaq +6%).
According to the analyst, Roku is strategically positioned to benefit from the ongoing shift to streaming as TV viewing habits evolve, with the bullish outlook primarily centered on Roku’s substantial advertising potential.
The analyst expects connected TV to be one of the fastest growing advertising mediums over the next 3-5 years, with Roku poised to be a significant beneficiary due to its scale and strong user engagement.
Investors can gain exposure to the stock via ARK Next Generation Internet ETF ARKW And ETF ARK Fintech Innovation ARKF.
Price action: ROKU shares are up 0.51% at $77.80 at last check Thursday.
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