Thrashed for months be equity analysts, Roku received a boost Friday morning when Guggenheim analyst Michael Morris upped his target price for the company by $10 to $145 a share, citing international growth prospects.
The result? Roku was still down over 1%, to under $124 a share, as of midday trading on the Nasdaq. That's about a fourth of what Roku was priced at when it peaked at around $473 a share back on July 19 of 2021.
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Since that time, equity analysts have harshed on Roku's Wall Street buzz, noting its decelerating user growth following the quarantine portion of the pandemic, some missed guidance, and the increasing costs of making Roku devices, a supply chain issue that's also curtailed user growth.
For his part, Morris has been in lock step with the Roku bears, downgrading his target price from $210 to $135 since Jan. 1.
In his latest note to investors, however, Morris said Roku is in the "early innings" of its international growth and has plenty of runs to score ahead.
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Notably, he estimates that 88% of the company's more than 60 million active users are in the U.S. Most of Roku's limited "international" presence is still in North America, he estimates, with 3% of usage occurring in Mexico and 2.7% in Canada. He postulates that 3.4% of usage occurs in the U.K.
“We believe that Roku is structured for strong long-term international share gains, with current operating system market share and revenue contribution in the very early stages,” Morris wrote. " ... We expect the account mix to index significantly higher within [international] markets, particularly in Latin America and Europe, as Roku continues to actively scale those TV regions.”
For his part, Roku Co-Founder and CEO Anthony Wood seemed confident in Roku's international growth prospects when he spoke during the Morgan Stanley Technology, Media and Telecom Conference last month, noting, "Once Roku enters a market outside the U.S., our share starts to grow."
