Roku (NASDAQ:ROKU) Shares Down 2.1% After Analyst Downgrade

Key Points

• Roku shares fell 2.1% after Wedbush downgraded the stock from outperform to neutral and set a $155 price target.
• Several other analysts also turned more cautious, with recent downgrades from Zacks, Susquehanna, and William Blair; overall, Roku now has a Hold consensus and an average price target of $151.56.
• Insider selling has been notable, including CEO Anthony J. Wood selling 25,000 shares, while Roku’s stock remains heavily influenced by the announced Fox acquisition and the market’s view of the deal value.

Roku, Inc. (NASDAQ:ROKU - Get Free Report)'s share price was down 2.1% during trading on Tuesday after Wedbush downgraded the stock from an outperform rating to a neutral rating. Wedbush now has a $155.00 price target on the stock. Roku traded as low as $137.92 and last traded at $137.95. Approximately 15,200,513 shares changed hands during trading, an increase of 343% from the average daily volume of 3,433,969 shares. The stock had previously closed at $140.90.

A number of other analysts also recently issued reports on the stock. Zacks Research downgraded shares of Roku from a "strong-buy" rating to a "hold" rating in a report on Tuesday, April 14th. Wells Fargo & Company upped their price objective on shares of Roku from $137.00 to $167.00 and gave the stock an "overweight" rating in a research report on Friday, May 1st. Susquehanna cut shares of Roku from a "positive" rating to a "neutral" rating and set a $160.00 price objective for the company. in a research report on Tuesday. JPMorgan Chase & Co. restated a "neutral" rating and issued a $160.00 price target (up from $150.00) on shares of Roku in a research report on Tuesday. Finally, William Blair cut shares of Roku from an "outperform" rating to a "market perform" rating in a research report on Monday. Thirteen equities research analysts have rated the stock with a Buy rating and fifteen have given a Hold rating to the stock. According to MarketBeat, the stock currently has an average rating of "Hold" and an average price target of $151.56.

Insider Buying and Selling

In related news, CEO Anthony J. Wood sold 25,000 shares of the firm's stock in a transaction dated Friday, June 12th. The shares were sold at an average price of $130.00, for a total transaction of $3,250,000.00. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, Director Mai Fyfield sold 832 shares of the firm's stock in a transaction dated Thursday, June 11th. The stock was sold at an average price of $119.64, for a total transaction of $99,540.48. Following the sale, the director owned 5,389 shares of the company's stock, valued at $644,739.96. This trade represents a 13.37% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold a total of 706,194 shares of company stock valued at $80,756,499 over the last 90 days. 13.45% of the stock is currently owned by company insiders.

Trending Headlines about Roku

Here are the key news stories impacting Roku this week:

• Positive Sentiment: The Fox deal provides Roku shareholders with a clear acquisition premium and a defined exit value, which supports the stock and has drawn fresh analyst interest with several firms raising price targets toward the deal level. Roku (ROKU) Agrees To Fox Acquisition In A Landmark Streaming Deal
• Positive Sentiment: Analysts at JPMorgan and Rosenblatt lifted targets to $160, signaling that Wall Street sees meaningful value in Roku even after the takeover announcement. Analyst target updates for Roku
• Neutral Sentiment: Several law firms have launched investigations into whether Roku’s board secured a fair price for investors, which could create headlines and possibly complicate sentiment, but does not change the announced deal terms yet. ROKU Alert: Monsey Firm of Wohl & Fruchter Investigating Fairness of the Proposed Sale of Roku to Fox Corporation
• Neutral Sentiment: Some commentary suggests Roku may still have a modest standalone value above the deal price, but the acquisition now dominates the stock’s near-term trading. Roku's Near-Term Upside Limited by Fox Deal, Wedbush Says
• Negative Sentiment: The takeover limits further upside for Roku as traders increasingly price the stock around the $160 transaction value rather than a higher independent growth multiple. Fox to acquire streaming device maker for $22 billion

Hedge Funds Weigh In On Roku

Large investors have recently modified their holdings of the company. Blue Trust Inc. lifted its holdings in shares of Roku by 680.0% in the 4th quarter. Blue Trust Inc. now owns 234 shares of the company's stock worth $25,000 after acquiring an additional 204 shares during the last quarter. Aventura Private Wealth LLC purchased a new position in shares of Roku in the fourth quarter worth $26,000. Bayban increased its stake in shares of Roku by 1,300.0% in the first quarter. Bayban now owns 280 shares of the company's stock worth $26,000 after buying an additional 260 shares during the period. WPG Advisers LLC purchased a new position in shares of Roku in the fourth quarter worth $31,000. Finally, Safe Harbor Fiduciary LLC purchased a new position in shares of Roku in the fourth quarter worth $31,000. 86.30% of the stock is currently owned by institutional investors.

Roku Price Performance

The firm's 50 day moving average is $119.60 and its 200 day moving average is $106.65. The company has a market capitalization of $20.34 billion, a PE ratio of 103.72 and a beta of 2.06.

Roku (NASDAQ:ROKU - Get Free Report) last issued its quarterly earnings data on Thursday, April 30th. The company reported $0.57 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.34 by $0.23. Roku had a net margin of 4.06% and a return on equity of 7.64%. The business had revenue of $1.25 billion for the quarter, compared to the consensus estimate of $1.20 billion. During the same period in the previous year, the firm earned ($0.19) EPS. The company's quarterly revenue was up 22.4% compared to the same quarter last year. As a group, analysts predict that Roku, Inc. will post 2.41 EPS for the current fiscal year.

Roku Company Profile

Roku, Inc NASDAQ: ROKU is a technology company that develops and operates a proprietary streaming platform designed to deliver entertainment content to consumers via internet-connected devices and smart televisions. Since its inception in 2002 in California, Roku has focused on simplifying access to streaming services for viewers worldwide. The company's platform enables users to discover, access and manage a wide array of over-the-top content from major streaming services, free ad-supported channels and niche providers.

At the core of Roku's product lineup are a range of streaming players and sticks, which connect to televisions via HDMI and deliver the Roku OS experience.

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