Roku (ROKU 1.12%) is rocking again. Shares of the streaming platform operator are trading at their highest levels since mid-February, moving up 10.3% last week after a bullish analyst initiation. Paul Golding at Macquarie kicked off his Roku coverage with an outperform rating, excited about the growing popularity of Roku's flagship operating system.
Roku OS continues to grow its penetration rate across smart TVs, opening the door for Roku to continue collecting ad revenue and referral fees. Golding is also bullish on the prospect of Roku Channel -- Roku's own platform with a growing catalog of curated content -- as the operating system pushes the channel front and center before a growing and engaged audience. He would later go on CNBC to discuss his new coverage, arguing that agnosticism is what makes the platform preferable to streaming services over the tech giants in this space with their own device-driven agendas. Golding is setting a $49 price target on the stock.
Image source: Roku.
California streaming
Roku stock has soared 49% since hitting a near-term bottom two months ago, and has more than tripled since going public at $14 last year. Macquarie's Golding is the latest Wall Street pro to put out a bullish note on Roku, but others have stepped up in recent weeks.
An important note here is that the stock has rallied through these bullish notes. Macquarie's price target of $49 may not seem very high for a stock that would go on to trade as high as $45.81 on Thursday, but it's actually at the high end of Wall Street price goals. The highest price target among the eight major analysts covering the stock is $50.
Analysts are warming up to Roku as it's heating up, and that will make things interesting if the shares keep inching higher. The stock has moved higher in five of the past six weeks, and as the upticks come, a lot of these bullish analyst ratings are tied to price targets that are near or below where the stock finds itself now. We're getting to the point where research notes that came out just a month ago are now stale, and these analysts will need to either jack up their price targets or downgrade the stock on valuation concerns.
Sentiment remains bullish on Roku, and even Citron Research's Andrew Left -- known more for his bearish missives, including knocking Roku late last year -- surprised investors with a recent bullish turn. Roku is in the right place at the right time as investors flock to streaming television plays and as viewer consumption shifts to digital platforms. There are now 20.8 million registered users streaming video through Roku devices or smart TVs running Roku OS, up 47% over the past year. Usage and revenue per user is also growing. Betting against that kind of platform revenue growth isn't a good idea when investors are smitten with the cord-cutting revolution story, and the odds have to go with earlier analysts boosting their price targets instead of downgrading Roku.
