Analyst Says Revenue Potential High for Roku; Expansion, Licensing Costs Could Delay Profit:

Wedbush remained “neutral” on Roku stock, Michael Pachter wrote investors before the company’s Thursday Q4 report, seeing “tremendous opportunities for revenue growth” but profitability likely in five years due to R&D, licensing and expansion costs. Cord cutting and the rise of over-the-top video services will likely contribute modestly to Roku’s player business as the company expands its licensing partnerships and ad revenue on The Roku Channel and with advertising on demand partners, Pachter said. Apple Plus and Disney Plus launches in the quarter drove increased cord-cutting, “which may have accelerated active account growth on the Roku Platform in Q4 in excess of our estimates,” said the analyst, though average revenue per user could be lower than estimated, with revenue share terms unclear.