Please ensure Javascript is enabled for purposes of website accessibility

Analyst Slashes Roku Price Target 32% Because This Is As Good as It Gets

By Rich Duprey – May 22, 2020 at 10:38AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The streaming platform has been reaping outsized financial rewards compared to its OEM partners.

Roku (ROKU -0.67%) stock is up 30% in 2020 and has nearly doubled from the lows it hit in March when the COVID-19 pandemic struck, but an analyst at investment firm Stephens thinks the streaming platform has peaked.

Kyle Evans downgraded Roku shares to equal weight from his previous overweight rating, and slashed his price target by 32% from $150 per share to $105, about 9% below where the streamer currently trades.

Woman watching a Roku TV

Image source: Roku.

Too good to be true

Even though one out of every three smart TVs sold in the U.S. is a Roku TV -- and it accounts for one out of every four sold in Canada -- Evans is worried the streaming platform's sustained outperformance in the market means it is benefiting more than the OEMs actually making the sets, particularly its biggest partner TCL.

Manufacturers have been trying to get Roku to participate in revenue sharing, but Roku has resisted the push, with CEO Anthony Wood telling analysts during its earnings conference call earlier this month, "In general, the Roku TV program brings a lot of benefits to our partners, both retailers, and OEMs, everything from strong consumer demand, low returns, great software...So I mean, there are lots of benefits that it brings."

Evans wrote in a note to investors that because the relationship "is tilted heavily toward Roku when it comes to financials," he thinks this is as good as it gets for the tech leader, and goes on to say, he tends to "get worried when things look as good as they can get."


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

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Roku Stock Quote
$56.40 (-0.67%) $0.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.