BofA ups PT for Roku on Amazon partnership, improving advertiser sentiment

Bank of America has raised its price target for Roku to $110, citing optimism due to an improving macroeconomic environment and a new partnership with Amazon, indicating a potential upside of 27.3% for the stock.

The analysts note a stabilization in the advertising landscape, with improved sentiment and expectations for growth in connected TV advertising and increased streaming video consumption contributing to Roku's positive outlook.

Roku's partnership with Amazon is expected to enhance the company's advertising inventory monetization and strengthen connections with demand-side platforms, further boosting revenue opportunities.

Bank of America has raised its revenue forecast for Roku for 2025 to $4.59 billion and its full-year EBITDA estimate to $360 million, reflecting the company's potential for revenue and profit expansion.

Recommendation Rating: Strong Buy

Analysts from Bank of America have increased their price target for Roku (NASDAQ: ROKU) and maintained a positive outlook, attributing their optimism to an improving macroeconomic environment and a promising new partnership with Amazon (AMZN).

The research firm observes that the advertising landscape, which faced uncertainty in recent months, shows signs of stabilization. They note, "sentiment has improved" as the second quarter progresses.

The collaboration with Amazon is seen as a testament to Roku's commitment to enhancing flexibility and fostering interoperability across its platform. Bank of America believes this partnership will present significant monetization opportunities for Roku's advertising inventory and strengthen connections with various demand-side platforms (DSPs).

According to the July 3 research note from Bank of America, "Roku has considerable potential to expand both its revenues and profits, benefiting from several positive industry trends as well as strategic company initiatives." These trends include: 1) growth in connected TV (CTV) advertising, 2) a sustained increase in streaming video consumption both domestically and internationally, and 3) improved fill rates (the percentage of available ad spaces that are successfully sold) within its advertising operations.

Bank of America has adjusted its revenue forecast for Roku for 2025 from $4.55 billion to $4.59 billion. Additionally, they have raised their full-year EBITDA expectation to $360 million, up from a previous estimate of $351 million.

The new price target for Roku is set at $110, an increase from $100, suggesting a potential upside of 27.3%. As of midday Thursday, Roku's stock has risen by 2.2%.