What happened
As a company on the forefront of the streaming-video explosion of the past few years, Roku (ROKU -8.26%) has been a hot item, at times, on the stock exchange. Wednesday, alas, was not one of those times. The company's share price took a more than 5% hit on the day, following an analyst's new, downbeat take.
So what
That prognosticator is Kenneth Leon of CFRA, who downgraded his recommendation on Roku's stock. For Leon, Roku is now a sell; previously, he had tagged it as a hold.
Leon's latest analysis on the company wasn't publicly available, so it's unclear why he made the move. He's not the only pundit getting gloomier about Roku, however. Several of his fellow prognosticators have also reduced their expectations on the company.
One is Jefferies' Andrew Uerkwitz. In mid-January, he also pulled the trigger on a Roku recommendation downgrade. Like his CFRA peer, Uerkwitz dropped it to a sell from the preceding hold. He also took an axe to his price target, chopping it down to $30 per share, when it once was $45.
Now what
Uerkwitz's reasoning is based largely on his belief that the "significantly" declining digital-ad market isn't priced into Roku's stock price yet. In his view, although Roku has its advantages as a provider-agnostic video-streaming platform, top streamers with solid content libraries -- like Netflix and Walt Disney -- are positioned to grab a majority of the "incremental" rise in spending on such advertising this and next year.
