Analyst: Roku Sales Could Triple By 2022

Macquerie sees the cord-cutting trend becoming international

by Patrick Martin

Published on Oct 9, 2019 at 9:51 AM
Updated on Jun 24, 2020 at 10:16 AM

Almost three weeks ago, Pivotal Research called Roku Inc (NASDAQ:ROKU) "overvalued" and said it's time to sell the streaming stock. Today, Macquarie is singing a different tune, raising its rating to "outperform" and hiking its price target to $130 from $110. The analyst in coverage sees an international shift in cord-cutting, and combined with smart TVs, envisions Roku's sales tripling by 2022. 

In response, Roku stock is up 3.2% to trade at $111.46 this morning. Although the shares have nearly quadrupled in 2019, they suffered a dramatic pullback in September, losing 32.77%. This damage was contained by the round $100 level, however, which coincides with ROKU's pre-bull gap levels from early August. 

Despite the stock's overall success this year, many analysts remain skeptical. Of the 15 brokerages covering ROKU, seven rate it a "hold" or "strong sell." That sentiment is echoed among short sellers, who control a healthy 12.1% of the equity's total available float. 

For those that want to join in on a possible Roku rally, now looks to be an attractive time to jump on the security with options. The equity's Schaeffer's Volatility Index (SVI) of 72% registers in the 25th percentile of its annual range, meaning near-term options premiums are pricing in unusually low volatility expectations.

What's more, the equity's Schaeffer's Volatility Scorecard (SVS) of 100 (out of 100) shows Roku's strong tendency to make bigger-than-expected moves during the past year, relative to what the options market was pricing in.


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