By Sam Boughedda
Investing.com — Digital TV streaming device company Roku Inc (NASDAQ:ROKU) saw its shares decline Monday after Wedbush analyst Michael Pachter cut the price target on the shares to $220 from $365.
The analyst, who kept an outperform rating on the stock, praised its recent growth stating it "did a phenomenal job growing its user base throughout the pandemic, and has increased monetization per user sufficiently enough to do so profitably. Roku continues to expand its active accounts – it added 1.25 million new users in Q3 and we expect another 3.1 million users were added in Q4."
However, Pachter added that they think active account growth "meaningfully decelerated" over the second half of 2021 as its TV equipment manufacturer partners struggled to get TVs to market due to component shortages and supply chain disruption, alongside consumers spending more time out-of-home as lockdowns faded.
Nonetheless, the analyst justified the decision to keep an Outperform rating on the stock by saying they "think that as the supply chain disruption lifts, perhaps early to mid-2022, user growth will reaccelerate."
"We adjust our target after the market has re-rated post-lockdowns, but we think the sell-off is over-done. We expect 35 – 40% annual EBITDA growth in the coming years, as the deceleration of active account growth and Roku-licensed TV sales is transitory," explained Pachter.
Roku shares are down 2% Monday, adding to recent losses, which have seen it fall 29.22% in 2022.