Roku’s (NASDAQ:ROKU) position in the rapidly changing video streaming market remains a key concern for CFRA analyst Ken Leon. Leon lowered his price target on Roku stock to $72 (11.7% upside potential) from $85, while maintaining a Hold rating.
The analyst believes that Walmart’s (WMT) acquisition of Vizio, a competitor of Roku, could pose challenges and uncertainty for Roku’s future top-line growth potential.
Roku’s Efforts to Drive Growth
Roku is making efforts to become the preferred platform for streaming companies by improving the viewer experience and introducing ad-supported tiers. Furthermore, the shift in consumers’ preference for streaming services from linear television presents a substantial growth opportunity for Roku. However, rising competition in the streaming space might slow Roku’s growth to some extent.
In the fourth quarter, Roku delivered an impressive performance, with revenue rising 14% year-over-year on higher hardware device sales. Also, the company witnessed active accounts rise by 14% to 80 million. Furthermore, it expects to report $850 million in revenue in the first quarter, which is higher than Wall Street’s consensus estimate of $834.1 million.
The company is expected to report Q1 results on April 25.
Is Roku Stock a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on ROKU based on eight Buys, 10 Holds, and three Sells assigned in the past three months. After a 30% decline in its share price so far this year, the analysts’ average price target on ROKU stock of $86.47 per share implies a 34.12% upside potential.
