Roku dips as Truist trims PT going into Q1 earnings
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Roku (NASDAQ:ROKU) shares dipped on Thursday as investment firm Truist cut its price target ahead of first-quarter earnings, noting sentiment is likely to be "cautious."
Analyst Matthew Thornton lowered the price target to $150 from $165, but kept the firm's buy rating on Roku (ROKU), pointing out that there is likely to be a focus on the firm's supply chain and broader macro concerns, as the stock is trading at an all-time low when looking at enterprise value to sales.
"We slightly lower our Player gross profit/margin forecast assuming a more elongated supply chain recovery (high oil prices, Covid shutdowns in China)," Thornton wrote in a note to clients.
Roku (ROKU) shares fell slightly more than 1% to $115.03 in premarket trading on Thursday.
In addition, the analyst slightly raised his adjusted EBIDTA estimate for 2022, noting that spending targets will be "difficult to achieve" but adjusted EBITDA estimates for further years were cut, as spending caught up.
Roku (ROKU) has a few tailwinds or catalysts going into the second-half of the year, including its upcoming Upfronts, easing comparisons and supply chain worries, as well as new content launches and potentially new international markets, Thornton pointed out.
Broader macro concerns such as Russia's invasion of Ukraine are also not likely to negatively impact Roku (ROKU), as it does not have "meaningful exposure" to either Russia or volatile foreign exchange movements.
Roku (ROKU) recently signed a multi-year extension of its agreement with Amazon (AMZN), letting Roku customers continue to access the Prime Video and IMDb TV apps on their Roku devices.