Shares of the California-based company, Roku, Inc., (ROKU), surged 4.5% to close at $421.70 on June 23, after a report of Comcast (CMCSA) CEO Brian Roberts’ comments kindled speculation of a potential acquisition of Roku or a merger with ViacomCBS (VIAC).
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The comment also lifted shares of ViacomCBS up by 2.8% to close at $45.68, while shares of Comcast dropped 3.7% to close at $55.48.
According to Barron’s, a source close to the CEO mentioned that Roberts was considering a deal with either of the two companies, even though Roberts mentioned that he “doesn’t feel a need to seek a merger.”
Roku manufactures a variety of digital media players for video streaming. Roku’s devices stream online content to the TV and enable content publishers to build and monetize large audiences. The company also provides advertisers with the ability to engage with consumers.
With a market capitalization of $55.8 billion, ROKU has gained 33% year-to-date and 242% over the past year. (See ROKU stock chart on TipRanks)
ViacomCBS is a leading global mass media and entertainment company that creates premium content and experiences for audiences worldwide. With iconic consumer brands, its portfolio includes CBS, Showtime Networks, Paramount Pictures, Nickelodeon, MTV, Comedy Central, BET, to name a few.
With a market capitalization of $27.2 billion, ViacomCBS has gained 16% in the last six months and 77% over the past year.
Notably, ViacomCBS has been targeted for a merger in the past by Comcast.
Yesterday, Deutsche Bank analyst Jeffrey Rand reiterated a Buy rating on Roku.
Rand said that ROKU “should continue to trade at a premium valuation” based on his belief of a continuous shift towards streaming away from linear TV viewership and Roku’s competitive position in the market.
Overall, ROKU has a Strong Buy consensus rating, based on 14 Buys, 2 Holds, and 1 Sell. The average analyst Roku price target of $443.27 implies 5.1% upside potential from current levels.
Vital Metric
Roku scores an 8 of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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