This Roku Analyst Is No Longer Bullish Even After Strong Q3 Beat, Adjusted EBITDA Doubling

Roku Inc. (NASDAQ:ROKU) reported its third-quarter results after markets closed on Monday.

While Roku reported strong quarterly results, its stock is now trading close to the value implied by the pending Fox Corp. (NASDAQ:FOX) merger, according to Rosenblatt Securities.

The Roku Analyst: Analyst Barton Crockett downgraded the rating from Buy to Neutral, while maintaining the price target at $160.

The Roku Thesis: Fox expressed its intention to close the acquisition as soon as possible, advancing the target from the previous mid-2027 timeline, Crockett said in the downgrade note.

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Crockett highlighted the following from Roku’s third-quarter results:

• Revenue grew 24% year-on-year to $1.502 billion, accelerating from 22% growth in the second quarter, beating the consensus estimate of $1.408 billion.
• Adjusted EBITDA grew 113% year-on-year to $249 million, significantly outperforming Street expectations of $161 million.
• Advertising revenue rose 23% year-on-year to $727.4 million. Political ad spend exceeded the 2024 Presidential election cycle, while Media & Entertainment advertising achieved the strongest year-over-year growth in four years.
• Devices revenue surged 33% year-on-year to $194 million. Roku launched its first OLED TVs in September.
• Streaming hours reached 39.9 billion, up 9% year-on-year.

"With the merger pending, Roku did not hold a call or provide specific guidance, other than to say it had confidence in the 2H26 outlook provided in the merger S4," the analyst wrote.

The merger with Fox is pending U.S. Hart-Scott-Rodino (HSR) antitrust clearance and the shareholder vote, Crockett said.

"With Roku trading within 3% of the announced $160 merger value (which is our price target), and within 1% of the price implied by the stock and cash merger terms, based on Fox’s current trading price," he further stated.

ROKU Price Action: Shares of Roku had risen by 0.89% to $161.79 at the time of publication on Wednesday.

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