RBC downgrades Roku after shares climb of nearly 200% this year

RBC downgrades Roku after shares climb of nearly 200% this year


A video sign displays the logo for Roku Inc, a Fox-backed video streaming firm, in Times Square after the company’s IPO at the Nasdaq Market in New York, U.S., September 28, 2017.

Brendan McDermid | Reuters

RBC Capital Markets lowered its rating on Roku to sector perform from outperform after the stock has nearly tripled this year.

Roku shares fell 2.9% in premarket trading on Tuesday from its previous close of $91.37 a share.

“Given what we view as sustainably robust growth and profitability levels, we believe ROKU’s YTD outperformance is fully justified,” RBC analyst Mark Mahaney said in a note to investors on Monday. “However, with the stock now trading at an intrinsically robust multiple [of 11 times its price to sales ratio], we see risk–reward as less compelling. Hence the downgrade.”

Roku has “dramatically outperformed the market,” Mahaney noted, as the stock climbed 198.2% so far this year through Monday vs. the S&P 500’s gain of 18%. RBC did not adjust its $90 price target on Roku shares.

“Given our view here, we would be constructive again on any major stock pullback, Mahaney added.

– CNBC’s Michael Bloom contributed to this report.



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