Is Roku Stock a Buy at $60? One Wall Street Analyst Predicts $74 Price Target

Roku (NASDAQ: ROKU) has been facing a challenging year, with shares down 35% year to date. However, the company has managed to deliver profitable growth for three consecutive quarters, sparking optimism among investors.

The latest earnings results have caught the attention of Seaport Research, prompting them to upgrade Roku’s stock from a neutral rating to a buy. The research firm has set a price target of $74, representing a 23% upside from the current $60 share price.

Roku’s prospects are looking up, as the macroeconomic headwinds that impacted advertising spending in 2022 are now behind them. Revenue growth has been steadily improving, with a solid 19% year-over-year increase in the first quarter of 2024. Analysts at Seaport Research believe that Roku is well positioned to capitalize on the expected growth in the digital ad market this year.

Despite concerns about increasing competition in the streaming industry, Roku has continued to grow its user base, with a 14% year-over-year increase in streaming households on its platform in Q1, reaching 81.6 million. The company’s ad-supported service, offering a wide range of free content, has been a key driver of this success.

With an attractive price-to-free-cash-flow ratio of 20, Roku’s stock is seen as offering good value for investors. The company’s improving free cash flow and plans to accelerate platform revenue growth in 2025 have the potential to drive the stock towards the analyst’s price target and beyond in the coming years.

While some may be hesitant to invest in Roku at its current price, the company’s recent performance and growth prospects suggest that it could be a promising opportunity for investors looking to capitalize on the digital streaming market.