Roku has attractive risk/reward as long-term connected TV opportunity remains intact – Susquehanna

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Susquehanna analysts lifted Roku (NASDAQ:ROKU) to Positive from Neutral with a $75 per share price target on Monday morning, telling clients in a research note that despite near-term noise, they believe the long-term connected TV (CTV) opportunity remains intact.

They state that Susquehanna continues to see ROKU as a prime beneficiary of the secular shift of linear budgets.

In fact, we see most of the opportunity as still in front of the company,” the analysts write. “In terms of near-term trends, we believe that the scatter market likely bottomed in late 4Q, with improvement building through 1Q23.”

Furthermore, Susquehanna believes the stock has an attractive risk/reward as its checks indicate that the broader CTV market is “generally healthy and should see a tailwind from the upfronts.”

“As noted by TTD, US CTV budgets are expected to be increasingly allocated upfront, ~56% vs. ~54% in 2022, and the majority of US advertisers expect to prioritize CTV, or a combination of CTV and linear, in this year’s upfronts,” the analysts add. “Separately, we believe ROKU is beta testing opportunities to bring more third-party DSP buying to its demand-constrained platform, and we view this as a potential source of incremental high-margin revenue.”