Roku Investor Sentiment Decidedly Negative Into Earnings, Says Analyst
Portfolio Pulse from Shivani Kumaresan
J.P. Morgan analyst Cory A Carpenter maintains an Overweight rating on Roku Inc (NASDAQ:ROKU) ahead of its Q1 FY24 earnings report on April 24, despite negative investor sentiment. Carpenter predicts a revenue beat similar to Q4's 3% rather than Roku's 9% average from 3Q22-3Q23, due to lack of evidence of scatter market improvement. The analyst expects Roku to guide Q2 Platform revenue to around 10% Y/Y, with potential further deceleration in Q3. The upcoming Walmart Inc (NYSE:WMT) and Vizio Holding Corp (NYSE:VZIO) merger is seen as a challenge for Roku's ad fill rates and revenue acceleration. However, Carpenter remains positive on Roku's long-term growth in connected TV. Key upcoming events include Roku's Upfronts presentation, WMT/VZIO regulatory updates, and Roku's Q3 guidance for Q4 Platform revenue acceleration.
April 22, 2024 | 6:01 pm
News sentiment analysis
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Ascending
NEGATIVE IMPACT
Vizio's merger with Walmart is seen as a strategic move that could impact the competitive landscape for connected TV, particularly affecting Roku.
The merger may enhance Vizio's competitive position but poses risks to Roku's ad revenue and market share, indicating a negative short-term impact for Vizio as it faces regulatory hurdles and integration challenges.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
Walmart's merger with Vizio is highlighted as a potential challenge for Roku's advertising revenue and market position.
The merger could lead to increased competition and potentially impact Roku's advertising fill rates and revenue, suggesting a negative short-term impact for Walmart as it integrates Vizio and navigates regulatory scrutiny.
CONFIDENCE 70
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
J.P. Morgan analyst maintains Overweight rating on Roku, expecting a modest Q1 revenue beat but cautious about short-term challenges including ad fill rates and the WMT/VZIO merger impact.
While the analyst's outlook is positive, the expected modest revenue beat and concerns over ad fill rates and the impact of the WMT/VZIO merger introduce uncertainty in the short term, leading to a neutral score.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 90