Roku rises even as analysts cut PTs following mixed Q1 (NASDAQ:ROKU)

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Roku (NASDAQ:ROKU) shares rose in premarket trading on Friday after the streaming company posted a mixed first-quarter, prompting several Wall Street analysts to cut their price targets, but note streaming is still a big market.

Morgan Stanley analyst Benjamin Swinburne lowered the firm’s price target on Roku (ROKU) to $105 from $115, noting valuation is no longer stretched, given the 60% decline in the stock year-to-date.

“Roku remains a clear leader in U.S. streaming distribution today, and [first-quarter] platform revenue growth highlights the benefit of its scale as consumers (and advertisers) continue their shift towards streaming,” Swinburne wrote in a note to clients.

Roku (ROKU) shares rose more than 4.5% to $95.94 in premarket trading on Friday.

Swinburne added that the U.S. is maturing and more competition will “likely remain key factors weighing on the growth outlook ahead.”

In the first-quarter, Roku (ROKU) said revenue jumped 28% year-over-year to $734 million, but gross margins fell 7.2% to 49.7%.

EBITDA slid 54% to $57.6 million, and EBITDA margin shed more than 14 percentage points to land at 7.8%. Active accounts grew 2% sequentially, and 14% year-over-year to come in at 61.3 million.

For the second-quarter, the company said it expects $805 million in revenue, a net loss of $109 million and break-even EBITDA.

J.P. Morgan analyst Cory Carpenter lowered the firm’s price target to $175 from $225, but noted that the company delivered “solid results against muted expectations.”

“This was one of Roku’s more straightforward [quarters] in recent memory, which should come as a relief following cautious read-thrus from streamers (NFLX/WBD), online advertisers (SNAP/YouTube), & continued supply chain challenges.”

Citi analyst Jason Bazinet, who rates Roku (ROKU) buy with a $225 per-share price target, noted that even though Roku’s first-quarter was mixed and net additions of 1.2 million were below estimates, the company maintained its full-year revenue growth guidance of 35%.

Earlier this week, Roku (ROKU) and Lions Gate Entertainment (LGF.A) (LGF.B) signed a multi-year deal to distribute Lions Gate’s theatrical films on the streaming platform.

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