Shares of Roku shot up 21% in morning trading Thursday after the streamer and device maker posted 20% growth in third-quarter revenue and offered upbeat guidance for the remainder of the year.
Roku added $12.72, to $72.42. The stock ended Wednesday trading at $59.70, up more than 20% since the start of the year.
After the market closed, the San Jose, California-based company said it brought in $912 million in revenue for the quarter ended Sept. 30., topping analyst estimates for revenue of $857.4 million, according to Zacks Investment Service.
The results, fueled by growth in content distribution and sales of the TVs it introduced in the spring, nevertheless resulted in a net loss of $330 million, or $2.33 per share, worse than Wall Street’s expectations for a loss of $1.99 per share.
Still, a positive outlook for the fourth quarter, with revenue expectations set at roughly $955 million, versus an forecast of $816.88 from analysts, sent the stock higher and generated several upgrades and price target hikes.
Pivotal Research upgraded the stock to “Hold” from “Sell” and raised its price target to $75, from $58, implying expectations for another 7% gain in the next 52 weeks. The analyst pointed to growth in new active account results, better than expected revenue and good prospects for Roku to materially beat its “as usual conservative” guidance, and progress that looks to end the actor’s strike soon as catalysts, according to a summary posted on TheFly.com.
DA Davidson raised its price target to $101 from $90 and kept a “Buy” rating on the stock. The firm was encouraged by the stabilization in the digital ad market despite an uncertain macroeconomic environment, the analyst wrote in a research note, TheFly.com noted. Another bright spot was a continued rebound in the video ad market during the quarter.
Wells Fargo raised its price target to $77 from $70 and kept an “Equal Weight” rating on the shares after Roku outperformed the firm’s third-quarter expectations and its guidance, which the analyst called “conservative,” topped its fourth-quarter views.
However, the Wells analyst wrote that the stock’s long-term upside is limited by Roku’s “punchy valuation,” TheFly.com said. “While the Q3 takeaway is undoubtedly positive, we continue to find Roku a challenge to value,” the Wells note said.
Not all of the response was positive. Evercore ISI analyst Shweta Khajuria raised the price target on Roku to $80 from $75 and kept an “In Line,” or “Neutral” rating but it removed the stock from the firm’s “Tactical Outperform” list, stating that investor sentiment was “getting increasingly cautious,” and said that despite the guidance, visibility into the company’s prospects remains low, Roku’s Q4 revenue growth and EBITDA guidance came in better than feared and above Street estimates. If recent history is any guide, the firm thinks the Q4 outlook will prove “conservative,” the analyst added.
The post Strong Q3, Solid Outlook Push Roku Shares Up 21% appeared first on TheWrap.
