Analyst Pivots on Roku Amid 'Dramatic' COVID-19 Spike, Light Competitive Field

Pivotal Research Group swapped a “sell” rating for a "hold" and raised its target price for Roku stock from $75 to $240 in a Thursday investor note. Analyst Jeffrey Wlodarczak cited comments by Liberty Media Chairman John Malone on the streaming platform’s competitive positioning, the ongoing “dramatic benefit” from COVID-19 and a “much slower than anticipated roll-out in competitive threats,” including the Comcast/Cox Flex product and early discussions of building Comcast’s Xfinity into Walmart TVs (see 2011030059). The pandemic “appears to have accelerated AMZN and ROKU’s lead (and pushed back competitive responses) with the potential for that lead to be sustainable especially as the platforms build global scale,” said the analyst. Wlodarczak raised Roku subscriber forecasts to 113 million active accounts by 2027, from 99 million previously, based on “high likelihood of return of Covid-lockdowns over the winter but also the clear inevitable decline of traditional PayTV.” The “currently mediocre Roku channel has the potential to be significantly strengthened with signing of new distribution deals,” he said, noting that he expects HBO to make such a deal.