Roku (ROKU) stock, like many other pandemic era stars, has had a rough 12 months.
The shares have shaved off 66% of their value over the period, 30% of which have evaporated since the turn of the year, as the market has turned its back on previous high-flying growth stocks.
Heading into this Q4 report today, Wedbush’s Michael Pachter is also keeping a lid on expectations. “We think active account growth meaningfully decelerated over 2H:21 as Roku’s TV OEM partners struggled to get TVs to market due to component shortages and supply chain disruption, coupled with consumers spending more time out-of-home as we exited lockdowns,” the analyst said ahead of the print.
Therefore, Pachter’s Q4 model errs on the conservative side. The analyst expects Q4 revenue of $893 million compared to the Street’s $897 million estimate and Roku’s guidance of $885 – 900 million. On the bottom-line, Pachter is calling for EPS of $0.02 vs. consensus at $0.07.
That said, while Pachter is cautious regarding the near-term, he expects the headwinds to abate as the year progresses. “We think that as the supply chain disruption lifts, perhaps early to mid-2022, user growth will reaccelerate alongside OEM and retailer discounting,” he explained.
Additionally, as Roku continues to gain share of digital marketing budgets, Patcher expects ARPU growth to “largely offset the shortfall in active account growth.”
What’s more, as most advertising still occurs on linear TV and will shift in Roku’s direction, Pachter believes the “rapid pace of growth is sustainable.” “As such,” the analyst summed up, “We think Roku’s long-term growth story has plenty of runway ahead.”
Pachter also thinks the sell-off is “over-done,” and accordingly, keeps his rating an Outperform, although given the market has “re-rated post-lockdowns,” the price target drops from $365 to $220, suggesting shares will see 52% growth over the next 12 months. (To watch Pachter’s track record, click here)
Roku appears to generate strong opinions on the Street right now. Based on 15 Buys and 2 Sells, the analyst consensus rates the stock a Strong Buy. Furthermore, most see plenty of gains on the horizon; going by the $287.25 average target, shares will climb by 98.5% in the year ahead. (See Roku stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
