Investing.com – Roku fell sharply Tuesday, following a downgrade from JPMorgan, on concerns over “increased near-term risk” amid the streaming company’s recent rally to record highs.
Shares of Roku (NASDAQ:), which hit an all-time high of $95.95 last week, fell more than 5.5% after JPMorgan downgraded the company to equal weight from overweight, but maintained its $84 price target on the stock. The stock has tripled this year.
“Although we remain very positive on Roku as a long-term nexus play on growth in smart TVs and streaming/OTT video, we believe the recent run and higher valuation combined with raised expectations creates increased near-term risk,” JPMorgan said.
The fundamental backdrop for Roku – brick and mortar retail positioning, Amazon (NASDAQ:) best sellers, key OEM partnerships and AVOD channel partner commentary – continues to look strong, according to the bank.
The bank also cited several downside risks to its $84 price target on Roku, including a potential acquisition target, investor focus on active user growth, progress on the international front and scarcity of investible streaming names as the biggest risks to its “tactical” downgrade.
Roku’s most recent all-time highs arrived on the back of better-than-expected earnings as customers continue to sign up to its platform, with two million accounts added in the first quarter.
The company estimated that more than a third of smart TVs sold in the U.S. in the first quarter were Roku TVs made by third-party manufacturers. It is also expected to benefit from Walt Disney ‘s (NYSE:) and Apple’s (NASDAQ:) launches of over-the-top streaming services this year.
Investment bank Stephens Inc. also downgraded the stock Monday saying the stock’s run-up has gone too far.
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