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Why Roku Stock Jumped Monday

By Daniel Sparks - Oct 28, 2019 at 4:55PM

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Another analyst is bullish on the streaming-TV specialist's shares.

What happened

Shares of Roku (ROKU -6.58%) surged on Monday, rising about 10% by the time the market closed.

The tech stock's gain followed a bullish note from Bank of America analyst Ziv Israel on the streaming-TV specialist. The analyst initiated coverage of the stock with a buy rating.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

The analyst downplayed new competitive offerings in Roku's streaming-TV player market, such as Comcast's (CMCSA -1.11%) decision to make its streaming player free for its internet-only customers. He emphasized that Roku's operating system for TVs is its biggest driver of account generation, making competition in the player market less important to long-term growth potential. In addition, he said there are hidden costs to Comcast's "free" streaming player, making it more expensive than it appears on the surface. 

The analyst also cited Roku's neutral positioning as a key advantage, enabling it to benefit from the growing competition between streaming services.

Israel gave the stock a buy rating and a 12-month price target of $154. 

Now what

Roku investors will get to hear management's thoughts on the evolving competitive landscape when Roku reports its third-quarter results on Nov. 6. Management guided for third-quarter revenue to be between $250 million and $255 million during the period. The midpoint of this guidance range implies 46% year-over-year growth. 

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Roku. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

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Roku Stock Quote
$78.10 (-6.58%) $-5.50
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