CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We think it is uncertain whether ROKU’s operating system holds great value in the fast-changing video streaming market as it attempts to be the preferred platform that viewers use to toggle easily between different streaming channels. The launch of its own branded TVs held promise to spur new subscribers at ROKU. However, Walmart’s (WMT 61 ****) planned $2.3B purchase of Vizio to bolster its own advertising business, like Amazon (AMZN 177 ****), is a negative for selling ROKU televisions through this retailer. ROKU’s operating outlook shows modest gains in EBITDA, with $4M in ’23, a $95M consensus estimate in ’24, and $239M in ’25; these are not material to apply TEV/EBITDA valuation. A long-term DCF model to value ROKU is difficult, in our view, given the uncertainties to drive significant revenue growth, EBITDA, and profits three to five years out or longer. Thus, we cut our target $13 to $72, on a forward P/S of 2.66x our $3.89B ’24 sales estimate, or $27.05/share. ROKU may only be an event-driven stock.