Pivotal Research analyst Jeffrey Wlodarczak downgraded Roku to Sell from Hold with an unchanged price target of $40. The analyst views the post-earnings share rally as “illogical” given the “frankly horrific” Q4 guidance. Roku’s guidance implies not only a year-over-year material decline, but an “almost unheard of sequential decline” in platform revenue into what is normally the most robust advertising quarter of the year, and this is despite all the viewing momentum in streaming TV, Wlodarczak tells investors in a research note. The analyst believes there is “something specific going on” at Roku “that seems to have significantly exacerbated the problem” of a “not great” advertising backdrop. The best case scenario for Roku shareholders in the near- to medium-term is a buyer emerges for the company, but buyers may be turned off by the company’s relatively poor results and management doesn’t seem interested in selling, contends Wlodarczak.
previous post