Can Roku Keep It Up With Q2 Earnings After the Close?

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Roku Inc. (NASDAQ: ROKU) is scheduled to release its most recent quarterly results after the markets close on Wednesday. The consensus forecast calls for a net loss of $0.22 per share and $224.2 million in revenue. Last year’s second quarter had breakeven earnings and $156.81 million in revenue.

Roku shares have absolutely exploded this year, more than tripling in 2019 alone. This company has built an exceptional platform on the back of its players, and as it expands in the rapidly growing Smart TV category, it has positioned itself as best in class for over-the-top advertising and is poised for international expansion.

As a result, Wedbush recently reiterated a Neutral rating and raised its price target to $105 from $65. According to the firm, the market clearly believes Roku has nearly unlimited growth potential and values the company similar to Netflix and Amazon. Amazon has few limits on the resources required to fund its expansion, while Netflix is in favor because of its strong international subscriber growth (in spite of its ever-expanding debt and negative free cash flow).

Wedbush detailed in its report:

Roku is in the early stage of international expansion with great opportunity and no debt. So far, it has effectively competed against the behemoths in tech – Amazon, Apple, and Google – and investors appear to believe that it has an opportunity to be a global leader in streaming platforms. Roku’s international expansion is likely to be through licensing its platform on TVs with existing international distribution; this will drive international expansion without requiring heavy investment in international distribution.

Excluding Wednesday’s move, Roku had outperformed the broad markets, with its stock up about 221% year to date. In the past 52 weeks, the stock was up about 112%.

A few other analysts weighed in on Roku ahead of the results:

  • RBC has a Sector Perform rating and a $90 price target.
  • Guggenheim’s Buy rating comes with a $119 price target.
  • Needham rates it at Buy with a $120 price target.
  • Stephens has an Equal Weight rating.
  • DA Davidson has a Buy rating and a $110 target.

Shares of Roku traded up about 4% on Wednesday to $102.65, in a 52-week range of $26.30 to $113.44. The consensus price target is $85.20.

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