- Roku had beaten analysts' expectations for quarterly earnings in seven of its last eight reports, according to StreetAccount.
- "ROKU broke a string of 2019 beats reporting a mixed 3Q and a frankly surprisingly mixed 4Q despite its (temporary) leadership position in the distribution of Disney+," Pivotal Research analyst Jeffrey Wlodarczak said.
Shares of Roku plunged on Thursday, after the streaming devices company posted third-quarter results that missed Wall Street's expectation following multiple quarters of blowout growth.
Roku reported a third-quarter loss of 22 cents a share, worse than the 18 cents a share loss analysts surveyed by FactSet expected. Roku had beaten analysts' expectations for quarterly earnings in seven of its last eight reports.
"ROKU broke a string of 2019 beats reporting a mixed 3Q and a frankly surprisingly mixed 4Q despite its (temporary) leadership position in the distribution of Disney+," Pivotal Research analyst Jeffrey Wlodarczak said. "We are not surprised by the ... decline indication in the stock in the after-market as an undeniably rich 12+X '20 revenue multiple simply does not leave a lot of room for anything but material beats."
Pivotal has a sell rating on Roku with a $60 price target. RBC Capital similarly pointed out Roku's advantage as a distributor, as it get revenue from the streaming services of Apple, Disney, Amazon and Netflix. But unlike Wlodarczak, RBC's Mark Mahaney has an outperform rating on Roku, as he sees it "as one of the best plays on ad-supported" over-the-top services, saying "the Streaming Wars catalyst isn't showing up in the numbers yet, but we continue to believe ROKU will benefit materially."
Needham analyst Laura Martin noted Roku's fourth-quarter forecast "was disappointing," although she said her firm "wouldn't be surprised" if the company's next quarterly results come in "well above its guidance." Needham has a buy rating on Roku with a $150 price target.
Roku's stock dropped 16% in trading to close at $118.46 a share. The company's stock has soared this year, climbing 360% through Wednesday's close.
– CNBC's Michael Bloom contributed to this report.