Roku Inc.'s stock (ROKU) is bucking the tech-market weakness Tuesday after Wells Fargo analyst Steven Cahall began coverage of the stock with an overweight rating and called the company an "advertising heavyweight in the making." The shares are up more than 5% in Tuesday trading. "We think ROKU's stock fortunes come down to how well it can monetize users," Cahall wrote, and he expects that Roku's scale and advertising technology will enable it to surpass expectations with its average revenue per user. Cahall also argued that the pandemic has shaken up the traditional ad-buying process and the customary tradition in TV media in which many ads are purchased "upfront" over the summer in anticipation of the television season beginning in the fall. "With Roku being able to negotiate for more premium impressions we believe there are now precedent conditions for [connected TV] to become more common in brand building ad campaigns - a space traditionally occupied by content networks," he wrote, while setting a $215 price target on the shares. Roku's stock has rallied 49% over the past three months as the S&P 500 has risen 3.7%.
-Emily Bary; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
September 08, 2020 11:52 ET (15:52 GMT)
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