What happened
Tic-tac-toe, three in a row, Wall Street is falling back in love with Roku (ROKU +2.26%) stock.
Down nearly 40% over the past 52 weeks, it might be easy to assume that everyone hates Roku right now. But as StreetInsider.com points out, on Tuesday last week, investment bank D.A. Davidson reiterated its "buy" rating on the video streaming company. One day later, Needham & Company laid out "7 reasons to buy" Roku. And now today, we see that Deutsche Bank has just put out a positive note on Roku stock as well.
And as of 3:20 p.m. ET, Roku stock is up 3.3%.
Image source: Getty Images.
So what
In this latest note -- the third positive analyst note on Roku in less than a week -- Deutsche argues that at "just" four times projected 2022 sales, Roku stock is being unfairly punished as investors turn away from "low profitability/high growth tech names," reports TheFly.com today.
This anti-growth sentiment among investors could change, however -- at least in Roku's case -- if the company can manage to accelerate its growth rate in the second half (H2) of 2022, especially if management also lays out a plan for continued growth internationally.
Now what
But what, specifically, would Roku have to do to impress investors and validate Deutsch Bank's buy thesis?
Consider: Already, analyst forecasts are calling for Roku to grow its sales 25% in the first quarter and 33% in the second quarter.
These growth expectations seem pretty aggressive already -- about 29% for the first half. And for the full year, analysts are forecasting total revenue growth closer to 35%, which implies sales growth of closer to 41% in H2. Seems to me, Roku will have its work cut out for it just meeting those expectations in H2 (sales only grew 40% in H2 2021, remember), much less exceeding them.
Investors buying Roku stock today on Deutsche Bank's say-so may find they've counted their chickens way too early for those eggs to have a chance to hatch.
