Investing.com – Roku surged on Wednesday after Macquarie upgraded its outlook on the streaming giant on expectations that a move into international markets could see its user base triple within the next three years.
Macquarie upgraded its rating on Roku to outperform from neutral and raised its price target on the stock to $130 from $110, sending shares of Roku (NASDAQ:) soaring around 8%.
With Roku already established in the U.S. domestic market, the road to pick up more users may lie abroad as the shift to connected television – a trend well underway in the U.S. – catches on internationally, according to Macquarie.
Roku can grow its user base by 200% to 300% to more than 70 million active accounts by 2022 from 31 million currently, the bank estimated.
The potential uptick in user growth would bolster the company’s financial performance, with Macquarie estimating that 72 million more subscribers by 2022 could drive platform revenue to $2.3 billion and generate total revenue of $2.7 billion.
That is more than double the company’s 2019 guidance for revenue in the range of $1.075 billion to $1.095 billion.
The thumbs up from Macquarie cooled concerns somewhat about the threat of rising competition to Roku from bigger companies, with Comcast (NASDAQ:) rolling out its Xfinity Flex streaming box and Facebook (NASDAQ:) set launch its Portal TV streaming device on Nov. 5.
The concerns caused the shares to drop more than 44% from a Sept. 9 peak of $176.55 to a low of $98.08 on Sept. 27. The share have risen 19% since.
As a result, Roku is up 280% for the year and has an average price target of $131, according to consensus estimates from Investing.com.
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