What happened
Shares of streaming-service company Roku (ROKU -10.29%) surged higher on Tuesday, rising as much as 13.1%. As of 1:20 p.m. ET, however, the stock was up about 8%.
The growth stock's gain is particularly notable because many companies' shares are trading sharply lower today. Tension in Russia and Ukraine has the market on edge. As of this writing, the tech-heavy Nasdaq Composite is down 1.5% and the S&P 500 is down 1.2%.
Roku stock's sharp gain on Tuesday is likely due to one analyst setting a $250 price target for the stock.
Image source: Getty Images.
So what
Shares of Roku have been pummeled in recent months. The stock's sell-off was worsened last week, when the company reported disappointing fourth-quarter results and provided weaker-than-expected first-quarter guidance. Even including today's gain, the stock is down 46% year to date.
Citi analyst Jason Bazinet thinks the sell-off has gone too far. While the analyst lowered his price target by $25 on Tuesday, his $250 price target still notably represents more than 100% upside from where shares are trading at the time of this writing.
Now what
Roku's revenue growth has been decelerating rapidly. Fourth-quarter revenue increased 33% year over year, down from 51% growth in the third quarter. Looking ahead, management guided for Q1 revenue to increase just 25% year over year. Roku said slowing growth is largely due to supply chain issues for TVs with Roku operating systems and reduced advertising budgets from companies negatively impacted by supply shortages. The company believes these challenges are temporary and thus guided for full-year revenue to grow 35% year over year.
