Investing.com -- Roku (ROKU) shares gained momentum in premarket trading on Wednesday following an optimistic note from Needham&Company, which reiterated its Buy rating and $100 price target.

The stock is up around 4.6% ahead of the opening bell.

"We expect Roku (NASDAQ:ROKU) to be purchased for a large premium within the next 12 months," said the Needham analysts. They believe it will be driven by Roku's unique assets and positioning in the connected TV (CTV) ecosystem.

The note highlighted Walmart (NYSE:WMT)'s $2.3 billion acquisition of Vizio as a catalyst for intensified competition in the CTV space. Walmart aims to challenge Amazon (NASDAQ:AMZN)'s Retail Media Network (RMN) by linking Vizio's CTV ads to its sales, a move Needham expects other players to emulate.

In this landscape, Roku stands out as the "only scaled CTV platform that can be purchased," positioning it as a prime acquisition target.

Needham identified six key reasons why Roku could attract buyers, including its installed base of 85 million households, vastly outpacing competitors like Vizio, which has 19 million.

They note that Roku also boasts valuable, privacy-compliant data from an average of 4.3 hours of daily viewing per home, making it attractive to streamers, retailers, and AI-driven firms like Amazon, Microsoft (NASDAQ:MSFT), and Google (NASDAQ:GOOGL).

Roku's pricing power is said to further bolster its appeal. Through the Roku Channel, the company aggregates content, sells ads, and keeps 50% of the revenue.

Additionally, the company's foray into branded TVs has gained traction, aided by a decline in shelf space for Vizio following Walmart's acquisition.

"Roku alone can be bought," the note emphasized, highlighting the unique opportunity for potential acquirers to negotiate directly with Roku founder Anthony Wood, who controls the company's super-voting shares.

Needham predicts 2025 as a pivotal year for such a transaction, particularly with a Republican-led regulatory environment likely to be more favorable to acquisitions.

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