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Roku Surges on Analyst Upgrade: Is the Streaming Giant a Buy?

Shares of streaming TV platform Roku (ROKU) surged 15% on Friday after reporting Q4 results and receiving a "Buy" rating with a $95 price target from JMP Securities, which initiated coverage.

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JMP Securities highlighted Roku’s strong position as a top streaming platform in the U.S. and its growth potential from increasing ad spending in the connected TV market. The stock reached a high of $104.96 during the session and is trading at $99.00 at the time of writing.

Market Reaction and Historical Context
Roku’s stock is no stranger to volatility, with 22 instances of 5% or greater moves over the past year. Friday’s rally signals optimism but doesn’t drastically shift Wall Street’s perception of the company. The stock remains down 9% from its 52-week high of $98.57 in February 2024.

The largest move in the past year occurred nearly 11 months ago when Roku plummeted 22% following a fourth-quarter earnings report that left investors wanting more clarity on future growth. Management cited macroeconomic pressures and a slow ad market recovery, dampening enthusiasm despite Roku’s revenue exceeding expectations.

Earnings and Growth Outlook
Despite past setbacks, Roku continues to show resilience. The company recently reported Q4 revenue of $1.2 billion, a 22% year-over-year increase that topped analyst estimates. Key earnings highlights included:
  • EPS (GAAP): -$0.24 vs. -$0.41 expected (41.7% beat)
  • Adjusted EBITDA: $77.5 million vs. $34.85 million expected
  • Active Accounts: 89.8 million, up 9.8 million year-over-year
  • Revenue Guidance: $1.01 billion for Q1 2025, slightly above expectations
Looking ahead, Roku projects 12.1% revenue growth for fiscal 2025, a modest deceleration from 17.9% in 2024. However, its forecasted EBITDA of $350 million exceeds Wall Street estimates, reinforcing confidence in its long-term profitability trajectory.

Is Roku a Buy?
Roku’s strong revenue growth, improving margins, and expanding user base suggest a promising future, especially as advertisers allocate more dollars to connected TV platforms. However, its history of volatility and the challenges posed by a competitive streaming landscape warrant caution.

For investors with a long-term perspective, Roku’s potential upside—bolstered by increasing ad revenue and a growing user base—makes it a compelling stock to watch. With shares still trading well below their highs, those bullish on streaming’s future may see this as a buying opportunity.


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