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Shares of the television streaming platform company Roku (ROKU -0.71%) were rising today after a Susquehanna analyst upgraded Roku’s stock and made positive comments about the company and the connected TV market.
The streaming stock was up by 8.8% as of 10:26 a.m. ET.
Susquehanna analyst Shyam Patil upgraded Roku’s stock to positive, from the previous rating of neutral, and set a price target for its shares at $75.
Patil said in a note to investors that an improvement in the streaming market, Roku’s competitive position, and overall positive trends in the connected TV space were reasons to be optimistic about the company.
“Despite near-term noise, we believe the long-term connected TV opportunity remains intact and continue to see Roku as a prime beneficiary of the secular shift of linear budgets. In fact, we see most of the opportunity as still in front of the company,” Patil told investors.
While he said the near-term business fundamentals appear to be “bottoming,” Patil added that the broader connected TV market “is generally healthy and should see a tailwind.”
Patil also mentioned that the majority of U.S. advertisers will increasingly prioritize connected TV ad spending. That could certainly help Roku’s business, as ad sales contribute to the company’s important platform sales segment. Platform revenue was up 20% in 2022 to $2.7 billion.
While Roku’s share price gains are good to see, investors should also keep in mind that the market is still pretty volatile right now — especially for tech stocks — and that the gains could quickly be erased as investors digest news about inflation, interest rates, and a potential recession.
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roku. The Motley Fool has a disclosure policy.
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