Pivotal Research analyst Jeffrey Wlodarczak initiated coverage of Roku (ROKU) with a Sell rating and $60 price target. The streaming service closed yesterday up 3% to $133.76. The emergence of "dramatically" more competition will likely drive the cost of over-the-top devices to zero and put "material" pressure on advertising revenue splits, Wlodarczak tells investors in a research note partially titled "Is ROKU BROKU?" Comcast's (CMCSA) recent moves with its free Xfinity Flex product will likely be copied by other distributors, adds the analyst. He believes Comcast's move to free will materially reduce Roku's potential outsized subscriber growth and average revenue per user opportunities, or the reasons for the stock's "premium" valuation. Roku management deserves credit for the asset they have created, but "everyone has realized the living room is too important and the big boys with massive leverage" are likely to make the company's growth much more difficult, argues Wlodarczak. The analyst believes that despite the recent selloff, shares of Roku are still "dramatically overvalued."
Pivotal Research analyst Jeffrey Wlodarczak lowered the firm's price target on Comcast (CMCSA) to $48 from $55 and keeps a Buy rating on the shares. Comcast reported an-line Q1 results but the competitive environment appears to be intensifying, the analyst tells investors in a research note. The firm believes there is an "outside shot" that Comcast could make a play for Warner Bros. Discovery (WBD) "given it can probably get the asset relatively inexpensively and it would clearly boost their scale in content," says Pivotal.
Pre-earnings options volume in Roku is 1.7x normal with calls leading puts 3:2. Implied volatility suggests the market is anticipating a move near 12.6%, or $7.87, after results are released. Median move over the past eight quarters is 17.1%.
Check out this morning's top movers from around Wall Street, compiled by The Fly. UP AFTER EARNINGS... To see the rest of the story go to thefly.com. See Story Here
Comcast (CMCSA) is scheduled to announce quarterly results on April 25, while Paramount (PARA) and Warner Bros. Discovery (WBD) are... To see the rest of the story go to thefly.com. See Story Here