Roku (NASDAQ:ROKU) shares rose more than 1% intra-day today after Macquarie analysts raised the price target on the company to $90 from $72, maintaining an Outperform rating. The analysts highlighted Roku’s impressive growth, noting that the platform now has 84 million active accounts, making it the top-selling TV operating system in the U.S., with sales surpassing the combined totals of its next two competitors. The Roku Channel is gaining traction, accounting for 1.7% of total TV viewing time, closely trailing Tubi, the leading free ad-supported TV (FAST) platform, at 1.8%.
The analysts believe that The Roku Channel is relatively insulated from the cost-per-thousand (CPM) pricing pressures affecting premium connected TV (CTV) services like Disney+ and Netflix. FAST platforms such as Roku and Tubi have maintained stable CPMs, ranging from the high teens to low $20s. Roku is now focused on better monetizing its large user base by enhancing both its appeal to brand advertisers and its ability to target specific audiences for lower-funnel, performance-based advertising.
Roku’s home screen reaches 120 million users daily, attracting upper-funnel brand advertisers from beyond the media and entertainment sectors. The company is also collaborating more actively with demand-side platforms (DSPs), including sharing data with The Trade Desk to broaden its demand pool. Additionally, its new Ads Manager tool simplifies access for smaller advertisers, including e-commerce businesses, to target audiences on the platform, potentially boosting ad revenues. Subscription price increases across the streaming services hosted by Roku are also expected to support continued revenue growth.