Why Did Oppenheimer Downgrade Roku Inc’s Stock?

By Jason Carr

Roku Inc (NASDAQ: ROKU) received a Sell rating and a $28 price target from Oppenheimer analyst Jason Helfstein today. The company’s shares opened today at $46.74, close to its 52-week high of $48.80.

Helfstein said:

“Downgrading ROKU to Underperform from Perform on valuation, and establishing a price target of $28. While Roku has established itself as the leading independent OTT streaming platform though a device and software strategy, the stock is now the most expensive publicly traded Internet-based company, on the basis of Platform revenue or Platform gross profit. While 3Q Platform gross profit exceeded our estimate by 21%, this was partially driven by one-time factors, and growth should slow to normal levels in 4Q. In our view, the stock is trading on non-fundamental factors, driven by a limited float (9% of non-GAAP shares) and high short interest (likely over 46% of float, as data is delayed). We see $28 as fair value based on 10x 2019E Platform gross profit.”

According to TipRanks.com, Helfstein is a 5-star analyst with an average return of 14.6% and a 60.6% success rate. Helfstein covers the Technology sector, focusing on stocks such as Endurance International, Interxion Holding NV, and IAC/InterActiveCorp.

Roku Inc has an analyst consensus of Hold, with a price target consensus of $26.25.

The company has a one-year high of $48.80 and a one-year low of $15.75. Currently, Roku Inc has an average volume of 9.56M.

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Roku Inc. engages in the provision of a streaming platform for television. It operates through the Player and Platform segments. The Player segment consists of net sales of streaming media players and accessories through retailers and distributors, as well as directly to customers through the company’s website.