Roku, Inc. [NASDAQ: ROKU] was a big gainer in Wednesday trading, and is in the green in pre-market trading. This follows news that Guggenheim was raising its target for Roku to $119, valuing the company at a premium. Guggenheim raised its target on the basis of higher demand by third-party companies for audience development opportunities through platforms like Roku. This demand will play a role in the continued growth of the company’s bottom-line.
Additional streaming platforms also add to the content variety for Roku. The company streams Netflix, Amazon and content from several other companies. In essence, with the entry of companies like Disney into the streaming business, Roku stands to benefit. Quite different from companies like Netflix that have to face Disney as a competitor.
On top of that, the company’s branded smart televisions have experienced a surge in demand. Roku also has its own channel for streaming movies, and this could push up user numbers, as cable television losses popularity. All these are factors that could keep this stock bullish, and possibly test Guggenheim’s target of $119 in the short-term.
The company’s books also paint the picture of a company that is on a bullish growth trend. The company’s has sales of 812.60 million however they are losing roughly 12 million. On the flip side, its revenues continue to grow by huge margins. Currently, its quarterly revenue growth (yoy) stands at 51.30%. This is a positive indicator that its products are experiencing an exponential uptake by the market. With the aforementioned factors such as a strong uptake of products, and the growing popularity of streaming, this company’s revenues are likely to keep getting better.
Roku’s price action for the past month further confirm its bullish momentum. This stock has been rising faster than its long-term moving average, with key support now at $72.13 on the monthly 50-day MA. With its fundamentals getting better, there is a probability that Roku will maintain this bullish trend, as it paces above $100.
Over and above its internal fundamentals, Roku’s prospects are made better by market-wide factors. One of them is that the NASDAQ is looking up again. The NASDAQ closed Wednesday trading at 7257 points, up by 0.39%. This goes to show that the scare around big tech companies, which carry the most weight in the NASDAQ, may have passed for the time being. It also shows that the Fed’s recent statement about interest rates have been taken positively by the market. If the NASDAQ continues to edge higher, the value of high growth stocks like Roku could gain at a higher rate. It has already been outperforming the market all through the year.
In closing remember, when it comes to trading, it always comes down to the chart. The chart tells the true story and how the market perceives the stock (company). In the case of ROKU, the market has been very bullish this year.