Roku’s 2024 lower net operating losses critical for investors’ belief in winning business model – CFRA

CFRA Research upgraded Roku (NASDAQ:) to Hold from Sell, raising the price target by $10 to $75 per share in a note Friday.

The firm told investors that ROKU’s share price enjoys a risk-on view to its streaming operating system given the sizable market opportunity as TV viewing shifts from linear networks to streaming.

“Our revenue forecast is $3.38B in 2023 and $3.9B in 2024, with EBITDA estimates of -$175M and +$75M, respectively,” said CFRA analysts.

“We believe lower net operating losses in 2024 is critical to whether investors believe ROKU has a winning business model to capture video streaming market penetration. In Q2 2023, ROKU’s 1.9M net subscriptions reached 73.5M total subscribers and average revenue per user was $40.67, down 7.2% Y/Y.”

They also noted that ROKU is pushing for upfront advertising away from the more volatile scatter ad market.

“Advertising verticals depend on health care and consumer product goods to spend more in 2H 2023, while automotive is a wild card with the UAW labor strikes,” the analysts added.