CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows:
We lower our target $5 to $67 on a forward P/S of 2.48x our $3.89B 2024 sales estimate, or $27.05/share using a narrower risk premium. ROKU’s operating outlook shows modest gains in EBITDA, with $4M in 2023, a $95M consensus estimate in 2024, and $239M in 2025; these are not material to apply to the TEV/EBITDA valuation. A long-term DCF model to value ROKU is difficult, in our view, given the uncertainties in driving significant revenue growth, EBITDA, and profits three to five years out or longer. Guidance for Q1 2024 is for total net revenue of $850M, total gross profit of $370M, and adjusted EBITDA at breakeven. The launch of its own branded TVs held promise to spur new ROKU subscribers. However, Walmart’s (WMT 59 ****) planned $2.3B purchase of Vizio to bolster its own advertising plans, like Amazon (AMZN 180 ****), is a negative for selling ROKU TVs through this retailer. There is a pivot from linear to streaming TV that may benefit ROKU’s platform, but there are no guarantees that this will benefit ROKU.