Shares of Roku (ROKU -3.29%) climbed 8.2% on Tuesday, following positive analyst commentary.
Rosenblatt Securities analyst Barton Crockett placed a buy rating on Roku's stock. He sees the digital media platform's share price soaring to $188. If he's correct, shareholders could enjoy gains of roughly 60% from the stock's current price near $117.
Crockett noted that Roku's stock price suffered a violent decline after reaching a 52-week high of $490.76 in late July. That corresponded with the stock market's "wicked turn" against premium-priced growth stocks, according to Crockett. Roku's fourth-quarter revenue shortfall and tepid sales forecast for 2022 also didn't help.
That said, Crockett believes the stock's plunge is presenting investors with an intriguing buying opportunity. He argued that Roku is well positioned as a "gatekeeper" within the global shift from traditional TV platforms to streaming options. Thus, he expects the company to grow sales at a healthy clip in the coming year.
Crockett is correct in that Roku is well situated to benefit from the migration of ad dollars to streaming platforms. Its over 60 million active customer accounts and nearly 20 billion streaming hours in Q4 alone make Roku a valued advertising partner for marketers.
However, Roku is facing intensified competition from well-heeled rivals, including Amazon.com, which debuted new smart TVs in September. Roku's ability to compete effectively with Amazon and other streaming giants will go a long way toward determining whether its stock can climb to Crockett's lofty price forecast.