Is Roku Stock a Good Option for Investors?

On Monday, Roku (NASDAQ:ROKU) stock rose 17.5% and closed at $89.46 with a market cap of $10.7 billion. More people will likely stay at home amid the coronavirus pandemic. The company should benefit from accelerated cord-cutting. However, the Dow Jones Industrial Average and the S&P 500 fell 3.04% and 2.93% on the same day, respectively. Read US Stock Market Crash: What Does It Mean? to learn more.

Roku’s stock price has risen 40.1% in the trailing five-day period, while it has risen 39.98% in the trailing 12-month period. The stock is trading 49.3% below its 52-week high of $176.55 on September 9, 2019. The stock was also trading 62.6% above its 52-week low of $55.02 on April 18, 2019. On a YTD (year-to-date) basis, the stock has fallen by 33.2% as of Monday.

As of Monday, 19 analysts cover Roku stock. Among the analysts, 13 or ~68.4% recommend a “buy” for the stock, four or ~21.1% recommend a “hold,” and two or ~10.5% recommend a “sell.” Analysts have an average target price of $149.31 on Roku. The target price implies a return of 66.9% based on the closing price of $89.46 on Monday. The consensus target price for the stock has fallen from $152.10 in February—a fall of 1.8%. The highest target price estimate is $200, while the lowest is $60.

On Monday, Wedbush decreased its target price on Roku stock from $115 to $86 and maintained a “neutral” rating. The analyst at Wedbush thinks that the company could benefit from the stay-at-home trend amid the coronavirus outbreak.

Last week, Loop Capital analyst Alan Gould upgraded Roku stock to “hold” from “sell” with a target price of $68. According to a report from TheFly, “The analyst believes that the company’s platform revenue will be less impacted by coronavirus than most media companies, even though his channel checks suggest that advertising will decline due to the sudden stop in the economy.” The report also said, “Gould adds that Fox (or FOXA) just solid its 6M share position in Roku and is acquiring the Tubi streaming platform. The analyst further notes that while Roku ecosystem continues to gain market share of connected TVs, he is cutting his FY20 EPS view to ($1.44) from ($1.25) and his FY21 view to (93c) from (70c).”

In the fourth quarter of 2019, Roku reported sales of $411.2 million with an adjusted EPS of -$0.13. The sales rose 49.1% YoY (year-over-year) in the fourth quarter. Roku’s Platform business segment’s sales rose 71.5% YoY to $259.6 million and accounted for 63.1% of the total sales. Analysts expected the company to post sales of $391.61 million and earnings of -$0.14 in the fourth quarter.

Roku added 4.6 million active accounts in the fourth quarter of fiscal 2019. The total number of active accounts was 36.9 million at the end of December 31, 2019. The streaming hours rose by 4.4 billion hours YoY to 11.7 billion. In addition, the average revenue per user increased by $5.19 YoY to $23.14.

Analysts expect Roku’s revenues to rise by 40.2% in fiscal 2020 to $1.6 billion. The sales will likely rise by 32.8% in fiscal 2021 to $2.1 billion. Analysts expect the company to post an adjusted EPS of -$1.32 and -$0.76 in fiscal 2020 and 2021, respectively.

Roku stock closed 4.9% below its 20-day moving average of $94.04 on Monday. However, the stock was 22.4% and 30.9% below its 50-day and 100-day moving averages of $115.32 and $129.40, respectively. The company’s 14-day MACD is -5.99, which indicates a downward trading trend. With a 14-day RSI (relative strength index) score of 44.4, the stock isn’t overbought or oversold.

Roku has an upper Bollinger Band level of $128.93. The company’s middle Bollinger Band level is $94.05, while its lower Bollinger Band level is $59.16. On Monday, the stock closed near its middle Bollinger Band level, which also suggests that it isn’t overbought or oversold.

Roku stock rose 5.9% in today’s pre-market trading session at 8:26 AM ET. Read Why Is Roku Stock Falling Today? for more analysis.