Analysts Upgrade Roku Stock After Strong Earnings Report

Roku (ROKU) shares are surging in premarket trading today, following the company's better-than-expected fourth-quarter results. The streaming platform reported a narrower operating loss and revenue growth that beat Wall Street estimates. As a result, analysts are upgrading their ratings and price targets for the stock. Let's dive into the key takeaways from Roku's earnings report and the subsequent analyst upgrades.

Roku's platform revenue growth accelerated in the fourth quarter, to 25% year over year, on growth in households, streaming hours per household, and sales per streaming hour. Roku also held expenses steady, resulting in 62% growth in EBITDA, to $77 million. Guidance indicates strength will persist.

Roku overdelivered for the fourth quarter of 2024, boosting revenue 22% and narrowing its net loss to beat Wall Street expectations. The streaming platform company posted Q4 revenue of $1.201 billion and a net loss of $35,548 million (versus a net loss of $78.3 million a year earlier), or 24 cents per share. Financial analysts on average expected revenue to come in at $1.15 billion with a loss of 43 cents per share, per LSEG Data & Analytics.

"We delivered outstanding Platform results in Q4 — our first quarter with more than $1 billion in Platform revenue, which grew 25% YoY. We also continue to expand our penetration in the U.S., which has surpassed half of broadband households," Roku said in its quarterly shareholder letter.



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The company noted in Q4, streaming hours on the Roku Channel grew 82% year over year, and in the U.S. it reached households with approximately 145 million people. "We continue to make progress growing ad demand through deeper third-party platform integrations, improving the Roku Experience (which starts at our Home Screen) to expand monetization, and growing Roku-billed subscriptions," Roku said.

In announcing the earnings, Roku said it expects to be operating-income positive for full year 2026.

More to come.

Analysts React to Roku's Earnings Report
Following Roku's strong earnings report, several analysts have upgraded their ratings and price targets for the stock. Here are some of the key analyst upgrades:

1. JPMorgan: The investment bank upgraded Roku to "overweight" from "neutral" and raised its price target to $115 from $92. Analysts cited Roku's strong platform revenue growth and improved profitability as reasons for the upgrade.
2. Benchmark: The research firm reiterated its "buy" rating for Roku and raised its price target to $105 from $85. Benchmark praised Roku's ability to grow its user base and monetize its platform effectively.
3. Wells Fargo: The financial services company upgraded Roku to "overweight" from "equal weight" and raised its price target to $85 from $77. Wells Fargo highlighted Roku's expanding content offerings and improved user experience as key drivers of its growth.

Roku's strong earnings report and subsequent analyst upgrades suggest that the company is well-positioned to continue its growth trajectory in the streaming market. With a focus on platform revenue and profitability, Roku is poised to capitalize on the increasing demand for streaming services and the growing number of streaming households. As the company continues to innovate and adapt to the evolving market landscape, investors can expect Roku to remain a strong performer in the streaming industry.

Sources:
- Roku's fourth-quarter 2024 earnings report
- Roku's quarterly shareholder letter
- Analyst ratings and price targets from JPMorgan, Benchmark, and Wells Fargo