Roku posted a profit for the fourth quarter, surprising investors. Additionally, the company surpassed 50 million active accounts, ending 4Q with 51.2 million active accounts.
Invest with Confidence:
- Follow TipRanks' Top Wall Street Analysts to uncover their success rate and average return.
- Join thousands of data-driven investors – Build your Smart Portfolio for personalized insights.
The digital media player company reported diluted earnings per share (EPS) of $0.49, when analysts were expecting a loss of $0.05 per share. Roku’s (ROKU) revenues came in at $649.9 million, up by 58% year-on-year and beating consensus expectations of $617.7 million.
Roku stated in its letter to shareholders, “In 2020, the Roku OS was the No. 1 smart TV operating system in the U.S. with 38% unit share of smart TVs sold. Despite a pandemic-related advertising slowdown in the U.S., our advertising business proved resilient with Q4 Roku monetized video advertising impressions more than doubling year-over-year, as advertisers increasingly followed users from traditional pay TV to streaming.”
Roku users streamed 17 billion hours of programming, up by 55% year-on-year. What’s more, Roku earned average revenue per user (ARPU) of $28.76 in 4Q. (See Roku stock analysis on TipRanks)
For the first quarter of FY21, the company expects to earn total net revenue of $485 million and a gross profit of $238 million. Roku also stated that historically, 1Q is a “seasonally softest quarter from a revenue perspective” as revenue is typically around 25% lower quarter-on-quarter.
Following the results announcement, Oppenheimer analyst Jason Helfstein raised the price target from $260 to $500 and reiterated a Buy rating on the stock. Helfstein said in a research note, “… 4Q results/1Q guidance highlight accelerating advertising revenue and enviable position within shift from linear to OTT”
“Top 6 agencies doubled investment in Roku during 2020, with strong FY21 upfront commitments. FY21 guidance suggests stable Platform GM outlook (~60%). International traction improving, with key OEM [original equipment manufacturer] partner TCL intending to release Roku TVs in Brazil and UK within 2021,” Helfstein added.
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 10 analysts recommending a Buy, 5 analysts suggesting a Hold, and 1 analyst recommending a Sell. The average analyst price target of $413.60 implies about 8.7% downside potential to current levels.
Related News:
Tilray Jumps 11% Pre-Market As 4Q Loss Narrows; Street Says Hold
Sleep Number Spikes 13% After Blowout Quarter; Street Says Hold
Garmin’s FY21 Outlook Beats Estimates As 4Q Results Shine