Shares of Roku (ROKU) are sliding after Comcast (CMCSA) announced that its Xfinity Flex, a Roku-like streaming player, is now free for internet-only customers. This comes as Guggenheim analyst Michael Morris raised his price target on Roku shares to $170 from $119, saying he sees an "underappreciated opportunity" for the company to drive significant growth as it expands internationally and numerous new streaming video services launch.
STREAMING BOX FREE FOR INTERNET CUSTOMERS: Comcast announced that Xfinity Flex is now included with an Xfinity Internet-only subscription, "providing millions of new and existing customers with the ability to easily access their favorite streaming services and manage their connected home devices right on the TV." An Xfinity Flex box is included, along with the Xfinity Voice Remote, at no additional cost as part of an Xfinity Internet-only subscription, the company said. Additional boxes will be available to lease for $5 per month per box, with a limit of two boxes per customer, Comcast added.
FACEBOOK PORTAL: Meanwhile, Facebook (FB) has announced its $149 Portal TV device, which supports video calls that get streamed to a TV set and also allows users to watch various programs. In a blog post, the company said that, "We're expanding the Portal family of home video-calling devices with three new models: Portal, Portal Mini and Portal TV. […] Portal TV brings smart video-calling to the largest screen in your home. It sits discreetly on top of or below your television for immersive video calling, giving you the freedom to move around during calls and still be seen and heard. […] With the Amazon [AMZN] Prime Video app on Portal, you can stream your favorite shows and movies, including Amazon Originals. You can also download other apps like SHOWTIME, CBS [CBS] All Access, Starz (LGF.A), Pluto TV, Red Bull TV and Neverthink with more apps coming soon. Portal also has a great speaker so you can listen to your favorite music from Spotify (SPOT), Pandora (P) and iHeartRadio and iHeartRadio [IHRT] Family."
UNDERAPPRECIATED OPPORTUNITY: In a research note to investors, Guggenheim's Morris raised his price target for Roku to $170 from $119, while reiterating a Buy rating on the shares. As the company expands its international offering and numerous new streaming video services launch with global growth ambitions, the analyst sees "underappreciated opportunity" for the company to drive significant economic growth and create value for shareholders. Overall, Morris believes the company is "uniquely well positioned" to benefit from the significant secular shift to streaming video consumption and targeted advertising demand. He also highlighted that its mobile app download trends showed "industry-leading momentum" in August.
In a research note published back in August, William Blair analyst Ralph Schackart said he expects Roku to experience similar phased stages of international growth as Netflix (NFLX) did during its international expansion. He has an Outperform rating on Roku's shares.
PRICE ACTION: In late morning trading, shares of Roku have dropped about 12% to $132.70.
Roku
-18.73 (-12.45%)
Comcast
+0.23 (+0.49%)
Comcast
+ (+0.00%)
Amazon.com
-9.99 (-0.55%)
Netflix
-7.79 (-2.61%)
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Lionsgate
-0.11 (-1.10%)
iHeartMedia
+0.27 (+1.84%)
Spotify
-0.64 (-0.50%)
Bought by SIRI
+ (+0.00%)