Roku Inc. (NASDAQ: ROKU) shares continued to rise into Tuesday after Needham analyst Laura Martin gave a price target of $50 for the company, 10 percent higher than the Wall Street consensus price target of $45, according to Bloomberg data. Roku shares jumped 18 percent on Monday, and then another 8 percent shortly after open on Tuesday.
Martin says Needham views Roku as a “pure-play on over-the-top TV-viewing growth”, but compared to other media service companies such as Netflix, Inc. (NASDAQ: NFLX), Roku has no content risk. Martin also says that it helps Roku, but hurts Netflix.
Roku’s increasing user engagement also factors into Martin’s price target increase.
"Roku's engagement lengths are hours per day per user, well above any internet company, suggesting higher monetization potential per user," Martin wrote.
Roku begun to integrate its streaming device into major TV models such as Hisense, Vizio, Sharp, Toshiba, as well as its recent licensing with Funai for Philips brand TVs.
Anthony Wood, Roku CEO, previously said that the advertisement segment of the company will be the primary growth driver. Roku has already and will continue to partner with more and more media services as well as TV brands.
In the third quarter, Roku reports it first earnings after going public. Roku reported a revenue of $124.78 million, increasing 40 percent year over year, but the company still reported an earnings loss. Regardless of the loss, Roku is in a strong position, as Martin says the closest competitor to Roku is Netflix.
Roku shares have increased 159 percent in the last month, and 107 percent since its initial public offering launch back on September 27.