Summary List PlacementShares of Roku jumped as much as 3% on Monday after a note from Bank of America listed seven reasons why the company s stock could surge 18% over the next 12 months.
2020 was a banner year for Roku as shares of the Los Gatos, California-based company rose some 142%.
The jump came amid a boost in viewership from the COVID-19 related stay-at-home audience, and despite a vaccine rollout, Bank of America doesn t see the run ending anytime soon.
The firm reiterated its buy rating on Roku and raised its price tag from $380 to $500 per share on Monday.
Read more: BANK OF AMERICA: Buy these 31 unheralded stocks as the recovery s hottest trades of recent months continue to gain strength in 2021
BofA gave seven distinct reasons for its bullishness in the Monday note.
First and foremost, analysts argued the continued move away from traditional pay-TV will buoy revenues for streaming providers like Roku.
About one-third of U.S. households have already cut traditional pay-TV, according to data from Roku. And eMarketer expects fewer than half of US households will subscribe to traditional pay-TV by the end of 2024.
Second, analysts at BofA noted an increased advertising budget allocation towards programmatic buying would greatly benefit the company.
Unlike traditional TV advertising, programmatic buying involves companies putting ad impressions up for auction and then having advertisers bid for the impressions. The system allows advertisers to manage the reach and frequency of their ads more effectively.
Roku s acquisition of DataXu last year (now called OneView) helps the company take advantage of the shift away from traditional TV advertising to programmatic Ads.
Programmatic Ad spending growth is expected to accelerate 54% year-over-year to $6.73 billion by 2021, according to BofA.
Read more: Raymond James investment chief breaks down his prediction for the market s trajectory in 2021, including the 5 sectors he s most bullish on - and shares why he thinks tech stocks are just getting started.
Third, BofA analysts expect international expansion to increase revenues significantly. Roku holds 38% of the streaming market share in the US and 31% in Canada. However, the company s new plans will increase its penetration in international markets, especially in the UK and Brazil.
That s incredibly important after Netflix revealed the value of international subscribers in its most recent quarter, BofA analysts argue.
Fourth, analysts expect increased content from the addition of HBO Max and the acquisition of defunct streaming platform Quibi to help bring in new customers.
Fifth, given the size and reach of Roku s platform, it has become an essential partner for streaming services, which are now competing for streaming rights of newly released movies after COVID-19 shut theatres down across the nation. BofA expects 2021 to be a year filled with new movies on Roku s platform as pandemic lockdowns continue.
And finally, Roku is set to benefit from the latest version of its operating system, the Roku OS 9.4, and its increasing brand awareness.
Shares of Roku traded at $426.98 as of 1:07 PM EST Monday, giving the company a market cap in excess of $54.5 billion.Join the conversation about this story NOW WATCH: What would happen if you jumped off the International Space Station
Monday 1 March 2021
Roku jumps after BofA gives 7 reasons why the stock could surge 18% (ROKU)
Latest News
Max Clifford: The Fall of a Tabloid King review – scandal at the heart of Fleet Street
- theguardian FAI ‘delighted’ that Irish and UK governments will support five-nation bid to host 2030 World Cup
- independent Max Clifford: The Fall of the Tabloid King, review: how a powerful predator hid in plain sight
- telegraph Woman (20s) arrested after multiple Garda cars pursue vehicle from Ballymun to Wicklow and back
- thejournal Tim Rabbitt insists ‘lessons haven’t been learned’ after being accused of attempting ‘to destroy the integrity’ of LGFA
- independent Zero Covid strategy would require 2km limit, closed schools and Level 5 until November , Donnelly says
- thejournal Government to suspend inward visas for travellers from ‘red list’ countries to reduce risk of Covid-19 variants
- independent Woman arrested after leading gardaí on high speed chase and streaming it live on social media
- independent ‘Ignore us at your peril’ – Fianna Fáil cumann calls for Micheál Martin to be replaced as party leader
- independent Your evening longread: Rediscovering neglected female Hollywood filmmakers of the 1970s
- thejournal Huge sigh of relief as almost 340,000 pupils return to school, but impact on Covid cases to be measured before full reopening
- independent Gordon Elliott not allowed to enter horses in British races while Irish probe into photo of him sitting on dead horse is ongoing
- independent Martin Rowson on Boris Johnson s border measures and the Brazil Covid variant – cartoon
- theguardian British authorities won’t allow trainer Gordon Elliott to race horses in UK while Irish probe into photo of him sitting on dead horse is ongoing
- independent Coming to the end of this period of the pandemic : The key points you need to know from tonight s NPHET briefing
- thejournal Gordon Elliott banned from entering horses in British races until conclusion of IHRB investigation
- independent Gordon Elliott barred from racing horses in Britain while investigation into image takes place
- thejournal Coveney urges anyone with information on alleged abuse in the Curragh to contact gardaí
- thejournal The Guardian view on the return of Donald Trump: plotting a hostile takeover | Editorial
- theguardian Homes raided in hunt for man who launched firework at gardaí as right-wing groups’ role in city riot probed
- independent Councillor Paddy Holohan doing himself and his community a ‘disservice’ says Sinn Féin TD
- independent Brian Moore s Full Contact podcast: Ill discipline and lack of variety cost England more than bad refereeing
- telegraph Homes raided in manhunt for firework thug as gardaí probe right-wing groups role in city riot
- independent ‘It reminds us that no one has to go through cancer alone’ - Irish Cancer Society launch ad campaign in support of all affected by cancer
- independent Have rugby s anonymous social media warriors forgotten it s only a game? | Robert Kitson
- theguardian Rishi Sunak s budget will do nothing to address a decade of economic negligence | Anneliese Dodds
- theguardian The best all-inclusive hotels in the Bahamas, from value-packed resorts to boutique diving properties
- telegraph One further death and 687 new cases confirmed as no new Covid-related ICU admissions for first time since St. Stephen s Day
- independent Global Covid cases rise for first time in seven weeks as WHO warns pandemic will not end this year
- telegraph Women’s National League survey reveals preferred option of second null void season by some clubs
- telegraph
Garda Commissioner says no evidence of ‘extreme left’ factions at anti-lockdown protest
- independentYou are the Secretary of State for Transport, and you have the authority to bring about change
- telegraphPollution causes around 725 deaths in Dublin each year, with 144 linked to diesel emissions, study finds
- thejournal
‘United are just a touch further ahead’ – Why Gary Neville believes Tuchel has big job to do at Chelsea
- independent Gordon Elliott: A Grand National at 29, his relationship with Michael O Leary and the photo that threatens his success
- independent Gordon Elliott s horrific dead horse photo has left the racing world numb with shock | Greg Wood
- theguardian Local authorities, not central Government, ‘best placed’ to set affordable housing targets – committee
- independent Pollution causes around 725 deaths in Dublin each year, with 144 linked to diesel emissions, study finds
- thejournal Meghan wears a £3,300 dress and Princess Diana’s bracelet for her big television moment with Oprah
- telegraph Golden Globes 2021: a night of fine choices capped by Chloé Zhao making history | Peter Bradshaw
- theguardian Strade Bianche 2021: When is it, which teams are racing, what TV channel is showing it and who are the favourites?
- telegraph It s making me quite emotional - racing legend Mick Fitzgerald reacts to Gordon Elliott photo controversy
- independent A slim majority in favour of giving citizens in Northern Ireland and abroad to vote in presidential elections
- thejournal Seven games, no wins and just one goal - Man United s big six record is holding the team back
- independent Former French president Sarkozy convicted of corruption and sentenced to year in prison
- independent France s former president Nicolas Sarkozy has been sentenced to one year in jail for corruption
- thejournal Gareth Bale looks close to his best —but is that enough for Jose Mourinho to keep picking him?
- telegraph I live with an eating disorder – and isolation has made that so much harder | Sam Dalling
- theguardian Slap in the face to farmers and rural communities : Anger over Bank of Ireland decision to close 103 branches
- independent Royal Caribbean announces first ‘fully vaccinated’ cruises this May as ‘green passport’ programme heats up
- independent Prince Philip transferred to another hospital for tests on pre-existing heart condition
- thejournal Sources