Roku (ROKU): Reassessing Valuation After Bullish Analyst Upgrades and Connected TV Ad Growth Optimism

Roku (ROKU) has been back in the spotlight after a wave of bullish analyst calls, with Morgan Stanley and Guggenheim highlighting its connected TV ad momentum and partnership driven platform growth as key upside drivers.

See our latest analysis for Roku.

The latest analyst upgrades and new content deals, such as adding CNN Headlines and expanding The Roku Channel, have come on top of a 30 day share price return of 16.61% and a year to date share price return of 46.09%. The three year total shareholder return of 163.17% suggests momentum has been rebuilding after a much tougher five year stretch.

If Roku’s run has you rethinking your streaming exposure, it could be worth exploring other high growth tech and media names through high growth tech and AI stocks.

With Roku now trading near fresh highs, at a modest premium to consensus targets but at a steep discount to some intrinsic value estimates, the key question is whether this rebound leaves real upside or if markets already price in the next leg of growth.

Most Popular Narrative Narrative: 5.8% Undervalued

With Roku last closing at $108.82 versus a narrative fair value near $115.48, the prevailing view leans toward upside if platform monetization keeps scaling.

The global migration of advertising budgets from linear TV to digital and connected TV, combined with Roku's successful rollout of new ad products (such as Roku Ads Manager) and deeper third party DSP integrations, increases its share of high margin digital advertising, which is showing up as both revenue growth and higher platform margins.

Read the complete narrative.

Want to see the math behind that optimism, and why future margins and earnings power carry such a rich multiple assumption? Read the complete narrative.

Result: Fair Value of $115.48 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensifying competition and any cyclical pullback in ad spending could quickly challenge bullish assumptions on Roku’s margins and long term earnings power.

Find out about the key risks to this Roku narrative.

Build Your Own Roku Narrative

If you are not fully convinced by this view or prefer to dig into the numbers yourself, you can build a custom thesis in just a few minutes: Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Roku.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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