Roku's Price Target Raised 25% by American Bank on Amazon Partnership

American Bank analysts have reiterated their bullish stance on Roku, Inc. (ROKU.US), raising their price target from $100 to $110. This adjustment is driven by an improving macroeconomic sentiment and the company's recent collaboration with Amazon (AMZN.US), which is seen as a positive development. The new target price represents approximately a 25% increase from Roku's closing price on Thursday.

The bank noted that the uncertainty surrounding advertising trends over the past few months appears to be diminishing, and market sentiment has improved as the second quarter progresses. The collaboration with Amazon is viewed as a strategic move by Roku to adopt a more flexible approach on its platform and enhance interoperability. This partnership is expected to bring significant opportunities, as Roku's ability to monetize its advertising inventory is set to improve, further deepening its relationships with other demand-side platforms (DSPs).

In a research report released on July 3, American Bank highlighted that Roku has substantial room for growth in revenue and profit. The company is poised to benefit from several favorable industry trends and its own strategic initiatives. These include the growth of connected TV (CTV) advertising, the structural increase in domestic and international streaming video, and the improvement in fill rates within its advertising business. Fill rates refer to the percentage of successful ad placements.

The bank has also revised its revenue forecast for Roku in 2025, increasing it from $4.55 billion to $4.59 billion. Additionally, the forecast for earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2025 has been raised from $351 million to $360 million. These adjustments reflect the bank's confidence in Roku's ability to capitalize on the growing demand for streaming services and its strategic partnerships.