Why ROKU Stock Is Rallying Today

Roku (ROKU) is climbing 7% in early trading after investment bank Benchmark identified it as a top pick and another investment bank, JMP Securities, initiated coverage of it with an Outperform rating.

Why Benchmark Is Bullish on ROKU

Benchmark believes that Roku can benefit meaningfully from establishing partnerships with other platforms and further monetizing its home screen. Taken together, such efforts could enable the company’s revenue to come in almost $1 billion above analysts’ average estimate, the bank believes.

A consumer smiling as they engage with streaming apps and voice platforms.

Also importantly, Roku could get a lift from a deal that would enable it to monetize Alphabet’s (GOOG,GOOGL) YouTube on its platform, Benchmark pointed out.

Benchmark kept a Buy rating and a $100 price target on ROKU.

Another Investment Bank Is Upbeat on ROKU

JMP Securities today started coverage of ROKU with an Outperform rating. The company will benefit as more ad dollars move to streaming, according to JMP, which expects the latter trend to take hold as more sporting events are streamed.  Additionally, the investment bank predicts that viewers will spend more time on streaming channels going forward.

Identifying Roku’s “low-cost hardware and user-friendly interface” as “key differentiators” versus the competition, JMP expects the company to remain the leader in the streaming space.

The Recent Price Action of ROKU Stock

Roku has advanced 3% in the last month, and it has risen 5.5% in the last three months.

While we acknowledge the potential of ROKU, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ROKU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey