Roku at ones desire be one of the big beneficiaries from the secular shift to internet video content, according to one Rampart Street firm.
KeyBanc Capital Markets initiated coverage for Roku pieces with an overweight rating, predicting the company will generate substantial sales growth over the next two years.
“We recommend buying ROKU. We see it as a single platform play on the growth in long-form streaming video, with a antagonistically competitive position and improving fundamentals,” analyst Evan Wingren author a registered in a note to clients Monday. “We believe its purpose-built TV operating system, OEM relationships, evolving platform, and early content efforts set it up for long-term value creation as creek video continues to see adoption globally.”
Roku shares closed up 1.3 percent Tuesday. The fellowship sells streaming video players and licenses its operating system to box manufacturers, which enables consumers to watch video content upward of the internet.
Wingren started his price target at $42 for Roku stakes, representing 29 percent upside to Monday’s close.
The analyst claimed the company is the market leader in video streaming players with a sundry than 35 percent share. He noted the company said its plying system was included in about 20 percent of smart televisions hawked in the U.S. and Canada last year. Wingren predicts Roku will issue revenue on its platform by more than 60 percent per year in 2018 and 2019.
“Roku instrumentalists and smart TVs enable it to capitalize on the growing secular shift to streaming video,” he wrote. “Although the womanhood of streaming viewing has shifted to ad-free environments, we believe that ad-supported waterway will continue to see strong adoption over the long run and could contribute a tailwind to Roku.”
Roku is slated to report its first-quarter earnings conclusions on May 9.
— CNBC’s Michael Bloom contributed to this story.