7 Technology Stocks That Will Lead the Sector Going Forward - 3 of 7

#3 - Roku (NASDAQ:ROKU)

Roku (NASDAQ: ROKU) - Roku’s stock is on a tear, climbing nearly 50% in 2019. This has been par for the course for Roku which has given investors more than its share of ups and downs since its initial IPO in 2017. However, the latest surge for Roku started to take shape after their third-quarter earnings were released in 2018. Despite a stellar report, their shares dropped and analysts predicted that shares would continue to decline under the weight of increased expectations. Then Roku did something the market didn’t expect, they beat expectations again. But while that tells you what happened, the real story is understanding why it happened. Simply put, analysts have stopped viewing Roku as simply a player provider (the Roku stick, etc.) which is a commodity – and started seeing its growth as a platform provider. Although the company stood up to competitors like Apple, Amazon and Google – and they continue to show growth in that area - relying on hardware means tight margins and lower profit potential. What the latest earnings report illustrates is that Roku has become a platform provider with subscription revenue and ad revenue – which are the kind of things that boost profits and make investors giddy.  Although there are threats to Roku’s platform service (Disney’s acquisition of Fox being the latest), analysts are projecting a 2 percent growth in revenue in 2019.

About Roku

Current Price

$68.93

Consensus Rating

Moderate Buy

Ratings Breakdown

14 Buy Ratings, 8 Hold Ratings, 2 Sell Ratings.

Consensus Price Target

$84.67 (22.8% Upside)