Investing.com -- In the wake of its strong earnings report, analysts at Wells Fargo (NYSE:WFC) and Pivotal Research Group issued upgrades for Roku (NASDAQ:ROKU) stock.
Roku's shares surged more than 14% Friday after the report's release.
Wells Fargo lifted its Roku rating to Overweight from Equal Weight and increased the price target to $129 from the previous $74.
The investment bank’s upgrade followed Roku’s solid fourth-quarter results, which bolstered the firm's confidence in the company's forward momentum.
The analysts highlighted ROKU's inventory growth, home screen innovations, and anticipated political advertising tailwinds in 2026 and 2028.
They expect ROKU's political revenue could surpass $200 million in 2026, contributing to a long-term shift in ad share in ROKU's favor. Wells Fargo also projected a 17% year-over-year increase in Platform revenue for 2025, excluding political advertising and certain accounting items.
“As an expensive stock, ROKU needs upward estimate revisions to grind higher,” Wells Fargo analysts noted.
Separately, Pivotal Research shifted its ROKU stock rating from Hold to Buy and raised its year-end 2025 target price from $65 to $125.
The group highlighted Roku’s net new active accounts from the latest earnings report, which exceeded forecasts, and financial results that surpassed expectations.
Pivotal analysts attributed the strong performance to the company’s advertising partnerships and the rollout of premium home screen advertising products.
The firm now expects a 14.5% revenue growth for ROKU in 2025, higher than their previous forecast and the company's guidance. They also increased their free cash flow forecast for 2025 and applied a higher target terminal EBITDA multiple in their valuation model, leading to the price target hike.
“While clearly NFLX and SPOT are materially better positioned than ROKU the reality is they both have proven out that focus/product and scale can allow one to be successful against dramatically larger competitors,” Pivotal analysts wrote.
“We think ROKU’s best-in-class product, a solid ’25, already large N. American market share and a successful international expansion set up ROKU on a path to continued success that does not appear to be properly valued by the market,” they concluded.
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