Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Roku Stock Could Surge 22% to $375, According to This Analyst

By Danny Vena - Dec 9, 2020 at 2:57PM

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

Is he right?

Shares of Roku ( ROKU -8.72% ) have already jumped 129% so far this year, but will surge to new all-time highs in 2021.

That's according to Citi analyst Jason Bazinet. On Wednesday, Bazinet raised his 12-month price target on Roku's stock from $220 to $375 -- the highest among his Wall Street peers. His new target represents potential gains for investors of roughly 22% over the stock's closing price on Tuesday of about $306.

A Roku TV mounted on the wall displaying shortcuts to streaming video channels.

Image source: Roku.

Bazinet cited several catalysts that he expects will drive Roku's stock higher in the coming year. The streaming agreement Roku reached with Discovery to distribute its streaming service Discovery+, as well as an expected deal to carry AT&T's HBO Max will result in further upside for the stock. The analyst also believes that Roku's international expansion will continue to gain traction.

Roku's stock has already gained 380% from its March lows, which Bazinet acknowledges. He notes that blessing Roku with the highest price target of all of Wall Street analysts "gives us some pause." 

Will Roku's stock price hit $375?

The evidence suggests that Bazinet may be underselling the potential. Roku's revenue in the third quarter grew 73% year over year, driven primarily by platform revenue that surged 78%. This is Roku's most profitable segment, consisting of advertising, the Roku Channel, and licensing of the Roku operating system to manufacturers of connected TVs. 

The streaming technology company's strong and engaged user base continues to accelerate, as Roku's active accounts climbed to 46 million, an increase of 43%, while streaming hours on its platform jumped 54% to 14.87 billion.

Given the impressive gains in these key metrics, the potential for Roku shares to climb significantly from here is not only possible, but likely. In fact, an increase of 22% over the coming year may well prove to be conservative.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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
$207.75 (-8.72%) $-19.86
AT&T Inc. Stock Quote
AT&T Inc.
$22.23 (-2.63%) $0.60
Discovery Communications, Inc. Stock Quote
Discovery Communications, Inc.
$22.26 (-4.34%) $-1.01

*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 service.

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 12/02/2021.

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

Our Most Popular Articles

Premium Investing Services

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