Yahoo Finance US$76.28: That's What Analysts Think Roku, Inc. (NASDAQ:ROKU) Is Worth After Its Latest Results
A week ago, Roku, Inc. (NASDAQ:ROKU) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. Revenues and losses per share were both better than expected, with revenues of US$881m leading estimates by 3.1%. Statutory losses were smaller than the analystsexpected, coming in at US$0.35 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Roku
Taking into account the latest results, the consensus forecast from Roku's 30 analysts is for revenues of US$3.92b in 2024. This reflects a decent 8.3% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 59% to US$1.62. Before this latest report, the consensus had been expecting revenues of US$3.89b and US$1.98 per share in losses. Although the revenue estimates have not really changed Roku'sfuture looks a little different to the past, with a cut to the loss per share forecasts in particular.
The consensus price target fell 6.3% to US$76.28despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Roku at US$105 per share, while the most bearish prices it at US$50.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Roku's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 11% growth on an annualised basis. This is compared to a historical growth rate of 26% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.1% annually. Even after the forecast slowdown in growth, it seems obvious that Roku is also expected to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Roku's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Roku going out to 2026, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Roku that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
