Streaming Stock Soaring: Morgan Stanley Predicts Continued Growth

Roku is making headlines with its stellar performance this year, and Morgan Stanley believes the streaming stock has even more room to grow. The bank recently upgraded Roku to overweight from underweight and raised its price target to $135 from $85, signaling a potential 24% increase from Monday’s close.

Analyst Thomas Yeh is optimistic about Roku’s future prospects, especially when it comes to sustaining double-digit platform revenue growth. He pointed to several factors driving this growth, such as deepening platform partnerships, higher streaming prices, increased premium subscription adoption, a robust advertising landscape, and positive movements in the connected TV industry.

“As linear TV budgets shift towards streaming, Roku’s Platform revenues are benefitting from growth in CTV advertising monetization,” Yeh explained. He also highlighted Roku’s recent acceleration in Platform revenue growth, indicating that the company’s strong user base and strategic partnerships position it well to capitalize on industry trends.

Yeh emphasized that this revenue growth should lead to improved operating leverage and profitability for Roku in the long run. With shares already up 47% this year, the market responded positively to Morgan Stanley’s rating change, with a more than 4% increase in Roku’s stock price.

Overall, analysts are bullish on Roku, with a majority of them giving the stock a buy or strong buy rating. According to LSEG data, 22 out of 32 analysts covering Roku are optimistic about its future performance. It’s clear that Roku is a company to watch in the streaming entertainment space, and it looks like there’s more growth on the horizon for this popular stock.