Roku Should Benefit From Linear TV Ad Exodus, Says Wedbush

Market conditions arising from COVID-19 that drove accelerated adoption of Roku devices “creates potential to substantially grow revenue and profits” long-term, Wedbush analyst Michael Pachter wrote investors Friday. Pachter expects advertisers to “continue defecting from linear TV to digital,” where Roku has a rapidly growing user base “and superior targeting capabilities.” Roku is also benefiting from increasing availability of live sports on OTT platforms, “which has accelerated cord-cutting,” he said. The platform’s growth rate is sustainable due to linear TV advertising that will “shift in Roku’s direction,” as content continues to shift to subscription-, premium- and ad-based VOD platforms, Pachter said. Wedbush expects continued revenue growth in transactional VOD, SVOD and AVOD given “substantial user growth coupled with Roku’s enhanced targeting capabilities.” The addition of Quibi original content (see 2101080028) to Roku’s free-to-watch Roku Channel should drive adoption in the desirable 18-to-35-year-old demographic, allowing the platform to command higher ad rates, Pachter said. Roku said Thursday it added 13 new live, linear TV channels to the Roku Channel: Baby Shark, Bloomberg Quicktake, Cine Romantico, CineVault Westerns, Hallmark Movies & More, Kocowa Classic, New K-ID and six Loop channels. Roku reports Q4 results Thursday at 5:30 p.m. EST.