Roku Announces 10% Workforce Cut & Raises Q3 Forecast
Roku (NASDAQ:ROKU) is set to trim its workforce by roughly 10% as part of its ongoing efforts to manage the growth rate of its annual operating expenses. As a result, shares jumped more than 9% pre-market today.
This move is projected to result in a cost of between $45 million and $65 million, according to a company filing. The majority of these expenses will be recorded in the third quarter of the year, and the reduction in staff is expected to be largely completed by the end of the fourth quarter, as confirmed by Roku.
Previously in March, Roku had announced a broader restructuring plan that entailed cutting approximately 6% of its workforce. As a result of these changes, the company now forecasts its third-quarter net revenue, excluding restructuring impacts, to fall within the range of $835 million to $875 million, up from its previous estimate of about $815 million.
| Symbol | Price | %chg |
|---|---|---|
| FILM.JK | 4530 | 0 |
| MSIN.JK | 2900 | 0 |
| 352820.KS | 193900 | 0 |
| BHIT.JK | 50 | 0 |
Roku’s Price Target Slashed at Susquehanna
Susquehanna analysts revised their price target on Roku (NASDAQ:ROKU) downwards to $80 from a previous $110, yet maintained a Positive rating on the stock. The analysts noted that Roku delivered a strong first quarter, surpassing expectations in revenue and profitability.
The second quarter's outlook appears generally stable, though Roku faces tougher comparisons and accounting changes that may affect platform revenue growth. However, an improvement in platform growth is anticipated in the second half of the year. The expected increase in seasonal spending could moderate EBITDA due to higher sales and marketing expenses in the devices segment.
Despite these challenges, the analysts believe that Roku is making the right strategic moves and stands as one of the best-positioned companies to leverage the expanding connected TV (CTV) advertising market.
Roku’s Upcoming Q4 Earnings Preview
Evercore ISI analysts maintained their In-Line rating and a price target of $80.00 on Roku (NASDAQ:ROKU), noting that since Nov 3—two days after Roku's Q3 earnings announcement—Roku's shares have not kept pace with broader market gains (Roku up 13% versus the Nasdaq's 19% and the S&P 500's 15%).
Despite this, the analysts anticipate a favorable outcome for the upcoming earnings report on Feb 15, expecting Roku to significantly outperform Q4 expectations based on positive indicators and to provide a Q1 forecast that meets or exceeds analyst predictions, along with some insights into the fiscal year 2024.
However, the analysts suggest that expectations for Roku may be set high. While a substantial increase in estimates is anticipated, it's believed that the market may have already accounted for these positive outcomes in Roku's current valuation.
Roku Earns an Upgrade at CFRA
Analysts at CFRA Research upgraded the rating for Roku (NASDAQ:ROKU) to Hold from Sell, while also increasing the target price to $89 from $75.
The analysts highlighted Roku's advantageous position amidst the shifting consumer preference towards TV video streaming from traditional linear networks, including pay TV and broadcast. Despite initial skepticism regarding Roku's path to profitability, which was expected to be more prolonged, the analysts acknowledged the market's growing enthusiasm for the transition to streaming.
As a result of this optimism, the analysts revised Roku's price target upwards by $14, adopting a forward Price/Sales ratio of 3.6x. This valuation is notably higher than the 2.0x average Price/Sales ratio of Roku's industry peers.
Despite the upgrade and target price adjustment, CFRA's earnings per share (EPS) projections for Roku remain the same, with an anticipated EPS of -$3.50 for 2023 and -$2.40 for 2024.
Roku Earns an Upgrade at CFRA
Analysts at CFRA Research upgraded the rating for Roku (NASDAQ:ROKU) to Hold from Sell, while also increasing the target price to $89 from $75.
The analysts highlighted Roku's advantageous position amidst the shifting consumer preference towards TV video streaming from traditional linear networks, including pay TV and broadcast. Despite initial skepticism regarding Roku's path to profitability, which was expected to be more prolonged, the analysts acknowledged the market's growing enthusiasm for the transition to streaming.
As a result of this optimism, the analysts revised Roku's price target upwards by $14, adopting a forward Price/Sales ratio of 3.6x. This valuation is notably higher than the 2.0x average Price/Sales ratio of Roku's industry peers.
Despite the upgrade and target price adjustment, CFRA's earnings per share (EPS) projections for Roku remain the same, with an anticipated EPS of -$3.50 for 2023 and -$2.40 for 2024.
Roku Downgraded to Sell, Shares Drop 4%
The analysts at MoffettNathanson changed their rating on Roku (NASDAQ:ROKU) from Hold to Sell, adjusting the price target to $66.00, an increase from the previous $64.00. As a consequence, shares plunged more than 4% intra-day today.
The analysts explained the decision by noting that even with a positive projection of an 18% EBITDA margin by 2025, based on their valuation method, the current stock levels still don't align with their analysis. This discrepancy has led to the downgrade of Roku's rating, despite a slight increase in the price target.
Roku Jumps 30% as it Anticipates to be Profitable in Q4
Roku (NASDAQ:ROKU) delivered mixed third-quarter results, with a reported loss per share of $2.33, which was better than the anticipated loss of $1.96 per share. However, the company's revenue for the quarter was strong at $912 million, surpassing the Street estimate of $855.1 million.
The company's stock experienced a notable surge, nearly 30% intra-day today, following Roku's unexpected fourth-quarter guidance. Roku anticipates an adjusted EBITDA of $10 million for the quarter, defying analyst expectations of a $57.6 million loss.
For the upcoming quarter, Roku forecasts revenue to be around $955 million, aligning closely with the Street estimate of $956.8 million.
