Analysts were optimistic that Roku Inc and Alphabet Inc Google had reached a multiyear distribution agreement for both YouTube and YouTube TV apps to make them accessible on the Roku operating system.
Stephens analyst Nicholas Zangler said, “details are scarce.” However, the agreement should permit Roku to collect origination fees on new YouTube TV originations.
The analyst, who also contends that YouTube app-accessibility will deter customers from choosing an alternative TV/OS at the point of purchase, keeps an Overweight rating and $475 price target on Roku shares, implying 119.3 percent upside.
Truist analyst Matthew Thornton views the development as a positive that removes a critical short-term overhang. Without YouTube, Roku OS TVs could have been perceived as being at a disadvantage to other TV platforms.
Thornton views the impact of this deal on Roku’s competitive positioning and share of smart TVs as more important than the direct net economics from YouTube TV.
He keeps a Buy rating and $360 price target on Roku shares, implying a 66.2 percent upside.
