By Nate Wolf
While Netflix and Paramount Skydance duke it out over Warner Bros. Discovery, analysts say Roku stock remains an under-the-radar option in the streaming industry.
Jefferies upgraded Roku shares to Buy from Hold and lifted its price target to $135 from $100 in a research note Thursday. The stock is analyst James Heaney's top small- and mid-cap internet pick for 2026.
Analysts at Wedbush Securities were on the same page. In a separate note Thursday, Wedbush added Roku to its "Best Ideas List" of high-conviction stock picks. The firm reiterated an Outperform rating for the shares and boosted its price target to $130 from $115.
Roku stock climbed 1.8% to $107.23 on Thursday afternoon. Shares are up 44% this year, but still off more than 75% from their closing high in 2021.
Roku isn't a participant in the streaming wars, but has established itself as a crucial conduit for the winning parties. The company makes streaming devices and licenses its operating system to TV makers, with viewers using the platform to watch content services such as Netflix and Paramount Plus.
Advertisements and subscriptions -- included in a category Roku calls platform revenue -- make up the bulk of the business. The growth of this revenue stream is a key debate among investors, Jefferies noted. While Wall Street has penciled in 15% growth in 2026, Jefferies is at 16% and thinks the company can push 20% if all goes well. Platform revenue grew 17% from the prior year in the third quarter, which ended in September.
Roku is ramping up a partnership with Amazon.com that will allow marketers to use Amazon's ad-buying system to reach Roku users, Jefferies pointed out. And campaign advertising ahead of the 2026 midterm elections should be another boost, the firm argued.
There is also a longer-term trend supporting Roku's rise: People are still cutting cable in favor of connected TV, bringing ad dollars with them. Roku has emerged as the go-to service against that backdrop, the Wedbush team argued. Would-be competitors such as Amazon are opting to collaborate, and names like Google may follow suit, the analysts said.
At the same time, the company is drumming up new ways to win ad spending, Wedbush noted. Roku launched its own ads manager to win over small- and medium-size businesses, for instance, and has introduced interactive ads that funnel viewers directly to products.
"We expect the structural work being done today to compound, positioning the company for accelerating revenue momentum throughout 2026 and 2027," the Wedbush analysts wrote.
The stock is a long way off from its heights in 2021, when Roku's profitability was at its peak and the Covid-19 pandemic caused user growth to spike. Yet margins have edged back up the last two years, the balance sheet is clean, and double-digit platform revenue growth is in play, Wedbush said.
Investors who sat on the sidelines in 2025 missed out on some big gains, but there is still time to give Roku a look.
Write to Nate Wolf at nate.wolf@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 11, 2025 13:24 ET (18:24 GMT)
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