Roku (ROKU) Stock Forecast & Price Target

Roku boasts a significant presence in the streaming market, with over 90 million streaming households and an impressive 127 billion streaming hours recorded in 2024, indicating robust user engagement. The company's revenue projections have been revised upwards, estimating a 15.4% increase in platform revenue to $4.75 billion, driven by growth in subscription fees and advertising alongside enhanced distribution of streaming services. Additionally, Roku is poised for margin expansion, with guidance suggesting a 200 basis points improvement in EBITDA margins by 2026, reinforcing its commitment to profitable growth and free cash flow generation.

Roku faces a negative outlook primarily due to a potential deceleration in revenue growth driven by volatility in the advertising market, which could adversely affect demand for its services. Furthermore, the company is experiencing losses in its Devices business as it employs a loss-leader strategy to boost platform adoption, presenting risks if component costs rise or if competitive pressures necessitate further price cuts. Additionally, the forecasted decline in core platform revenue growth from management's guidance raises concerns, particularly in the context of broader economic slowdowns that might impact advertising budgets across various sectors.