Roku (ROKU – Research Report), the Communication Services sector company, was revisited by a Wall Street analyst on May 2. Analyst Cameron McVeigh from Morgan Stanley maintained a Sell rating on the stock and has a $75.00 price target.
Cameron McVeigh has given his Sell rating due to a combination of factors impacting Roku’s business environment. Despite Roku’s recent financial results being slightly better than expected and the company maintaining its platform revenue guidance, there is a notable shift in advertising buying patterns. Advertisers are moving from long-term commitments to shorter-term programmatic buying, which reflects uncertainty in the macroeconomic environment. Although Roku has adapted to this shift by investing in flexible programmatic channels, this comes at the cost of slightly lower platform gross margins.
Additionally, Roku faces challenges from a highly competitive connected TV (CTV) industry, with major players like Prime Video and Netflix intensifying the competition. The company’s shares have already declined by approximately 10% year-to-date, influenced by concerns over tariff impacts and a softening macroeconomic landscape. McVeigh remains cautious about Roku’s ability to sustain its current platform revenue growth, leading to the Sell rating with a price target of $75.
Based on the recent corporate insider activity of 84 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ROKU in relation to earlier this year.