Roku Inc's high-flying stock tumbled 15% on Monday after Morgan Stanley dow...
) high-flying stock tumbled 15% on Monday after Morgan Stanley downgraded the video streaming company, warning that revenue and profit growth could slow next year.
FILE PHOTO A video sign displays the logo for Roku Inc, a Fox-backed video streaming firm, in Times Square after the company's IPO at the Nasdaq Market in New York, U.S., September 28, 2017. REUTERS/Brendan McDermid/File Photo Morgan Stanley analyst Benjamin Swinburne cut Roku to “underweight” from “equal-weight” and trimmed his price target by $10 to $110, warning of “overall exuberance over all things streaming.”A major winner in the consumer shift away from cable television in favor of Netflix and other streaming services, Roku’s stock has gained more than 300% in 2019, even after Monday’s slump.
Shares of the San Jose, California company, which reported a wider loss for the September quarter, are valued at an elevated 12 times revenue expected over the next 12 months, compared to a multiple of about 6 for streaming leader Netflix, according to Refinitiv. “We believe there are risks to growth expectations not reflected in current valuation levels. Specifically, we think revenue and gross profit growth slow meaningfully in ‘20 and the multiple compresses,” Swinburne wrote in a report.
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