Roku shares are up nearly 28% within the last month but Macquarie Research thinks that rally still has room to run. The firm initiated Roku with an outperform rating and a $49 price target.
"Disintermediation of television content and services leaves Roku in a position to capitalize on its role as a new-age intermediary," analyst Paul Golding wrote in a note to clients Thursday. "Roku stands to benefit from more ads thanks to connected TV viewership."
Magna, a global marketing consultant firm, expects global digital ad spend to hit ~$100B by 2019 and keep growing – a source of potential upside highlighted in Golding's analysis.
"What they have here, they sell these players, these basically set-top boxes, they don't make a lot of money on that but what happens is they build their subscriber base. It gets cumulative, it's sticky, it's much higher margins...They're this close to becoming profitable," Lebenthal said.
Although he doesn't see the company getting crushed by competition anytime soon, Lebenthal is still cautious about the size of his position. "It's very volatile. You got to be comfortable with that volatility," Lebenthal said. "Don't take too much of it on but I do think this is going back to $50 easily."
It's been a wild ride for the stock. Within the last six months, Roku's share price has gone from roughly $56 in December down to $30 in April before rebounding back up to nearly $45 as of Thursday's close.
Roku finished up 3.6% on Thursday while the NASDAQ hit a new all-time intraday high at 7768.60.