By Emily Bary
Guggenheim downgraded Roku's stock to neutral from buy on Thursday
On the one hand, Apple (AAPL) plans to start playing more nicely with other media-industry players, meaning that users will be able to watch its new TV apps on their Roku (ROKU) devices. Still, Apple's announcements mean that there will be yet another competitor in the media landscape, one with its own existing hardware and its own options for purchasing premium subscriptions to channels like HBO and Showtime.
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Though Roku shares gained on the day of Apple's streaming event, they've been choppy in the ensuing days. That includes a drop of more than 8% as of midday trading Thursday, after an analyst called Apple's newfound interest in programming a potential threat and downgraded the stock to neutral from buy ().
"We believe that the Apple video product unveiled on March 25 represents an additional risk to Roku's active user base (even as the platform includes The Roku Channel) while Amazon's (AMZN) and Viacom's (VIA) greater pushes into advertising video on demand (AVOD) are increasing competition," wrote Guggenheim's Michael Morris.
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Morris highlighted a sale of 100,000 shares by Chief Financial Officer Steve Louden, which "has also shaken our confidence" and represents Louden's non-option share holdings.
Morris wrote that Wall Street's consensus expectations appear to bake in acceleration in ad-dollar growth and continued momentum in active account additions, though he remains upbeat about the secular trends that underpin Roku's business. He lowered his price target on the stock to $72 from $77.
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Roku shares have more than doubled so far this year, as the S&P 500 has climbed 15%.
-Emily Bary; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
April 07, 2019 09:45 ET (13:45 GMT)
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