Analysts at CFRA Research upgraded the rating for Roku (NASDAQ:ROKU) to Hold from Sell, while also increasing the target price to $89 from $75.
The analysts highlighted Roku’s advantageous position amidst the shifting consumer preference towards TV video streaming from traditional linear networks, including pay TV and broadcast. Despite initial skepticism regarding Roku’s path to profitability, which was expected to be more prolonged, the analysts acknowledged the market’s growing enthusiasm for the transition to streaming.
As a result of this optimism, the analysts revised Roku’s price target upwards by $14, adopting a forward Price/Sales ratio of 3.6x. This valuation is notably higher than the 2.0x average Price/Sales ratio of Roku’s industry peers.
Despite the upgrade and target price adjustment, CFRA’s earnings per share (EPS) projections for Roku remain the same, with an anticipated EPS of -$3.50 for 2023 and -$2.40 for 2024.