Roku Analyst Says TV's Future Hinges On This 'Powerful' Cost Saver, But It's Still Early

Roku Inc's (NASDAQ:ROKU) CFO Dan Jedda has been responsible for the company's strong free cash flow (FCF) growth, according to Needham.

The Roku Analyst: Analyst Laura Martin maintained a Buy rating and price target of $88.50.

The Roku Thesis: Jedda has taken the company from negative FCF of 150 million in 2022 to more than $200 million in 2024 and a guidance of over $350 million for 2025, Martin said in the note.

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She mentioned some key takeaways from a recent discussion with experts about the future of CTV and Streaming/OTT.

"While bundling was seen as a defensive strategy, e-commerce linked CTV ad units and new SMB demand were raised as under exploited revenue growth levers," the analyst wrote.

Advertisement dollars are shifting from linear TV to connected TV. However, there is downward pressure on streaming ad unit CPMs (cost per thousand impressions). This is due to excess supply and lack of differentiation in ad units, she added.

Experts see GenAI as "both a cost saver and a new powerful personalized creative enabler, though it is still in its early stages of adoption," Martin further stated.

Price Action: Shares of Roku had declined by 1.71% to $70.65 at the time of publication on Thursday.

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