There has been lots of talk this year of the COVID-19 benefits reaped by streaming services. As a result of the stay-at-home culture, OTT leader Roku (ROKU) has been a prime beneficiary, experiencing large account growth.
But according to Rosenblatt analyst Mark Zgutowicz, Roku is particularly well placed to benefit from another trend: the move from linear to connected TV (CTV).
Following discussions within OTT/CTV programmatic venues, the 5-star analyst notes there is clear indication “the demand picture for Roku will soon climb to new heights.” Zgutowicz believes the big 5 Ad agencies are “making a concerted effort to negotiate volume commitments for OTT/CTV inventory.”
Importantly, Zgutowicz adds, the budgets for these advertising needs will come from “long-standing linear spend.”
In other words, the agencies are realizing the untapped potential of CTV, as consumers move from the “decades old model” of linear TV to more flexible CTV services. This is great for CTV services as a whole, but Zgutowicz highlights why it is particularly promising for Roku.
“Roku is a well-positioned beneficiary with its leading 40M+ CTV household reach, tightening gatekeeper status, and enhanced ad stack, while a reshuffle of linear to digital suggests more tangible Roku economics,” the analyst explained.
Furthermore, Zgutowicz believes Roku’s “gatekeeper status is underappreciated.” While there are now multiple “homogeneous OTT services,” it is worth remembering they are all available on Roku, with Roku usually the “preferred access point.”
Additionally, the pandemic has only cemented Roku’s leading status as its “ad monetization continues to well over-index the other primary gatekeeper, Amazon’s Fire TV.” While the two combined cater to an estimated 70% of US broadband households, Roku is nearly 18 months ahead of Amazon, where its video ad IP and sales strategy is concerned.
So, this is excellent news for Roku, but what does it mean for investors? Zgutowicz keeps to his Buy rating and $195 price target, indicating potential upside of 15% from current levels. (To watch Zgutowicz’ track record, click here)
Ratings wise, the majority of Wall Street agrees. Based on 13 Buys, 5 Holds and 2 Sells, the stock has a Moderate Buy consensus rating. However, in contrast to Zgutowicz’ forecast, the $167.21 average price target implies share will remain range bound for the foreseeable future. (See Roku stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
“Big Pharma” doesn’t come much bigger than Pfizer (PFE). Although you could argue it is so big, the stock can hardly move. Shares are essentially trading for the same price as 3 years ago.
Pfizer is also one of the leading names in the hunt for a COVID-19 vaccine. But unlike other names in the race to be first to market with a solution, the catalyst has had no bearing on the stock.
However, after attending the company's investor presentation, Mizuho analyst Vamil Divan believes the event “successfully illustrated how the company is evolving into a ‘New Pfizer.’"
Pfizer has an extensive pipeline of vaccines and treatments that it expects will generate over $15 billion of annual sales by 2025. The “New Pfizer” is also an attempt to highlight the giant’s growth potential. The upcoming spin-off of its Upjohn portfolio should rid it of unwanted bulk and help it become an “innovation-driven biopharma company.” The company expects to grow the top-line by 6% a year, while delivering double-digit growth on the bottom line.
On the rare diseases front, Pfizer anticipates six rare disease assets will be in Phase 3 trials by the end of the year, including three gene therapies.
The company is also developing a wide range of immunology products, “each for a targeted number of indications where there appears the potential for a truly differentiated product.”
Leading the charge form this business unit is abrocitinib, an oral JAK-inhibitor which Pfizer last month filed for the treatment of atopic dermatitis. Pfizer believes the treatment could reach annual sales above $3 billion.
Pfizer is also targeting the launch of 6 new vaccines by 2025. As for the company’s collaboration with BioNTech on a COVID-19 vaccine, Divan said, “we are encouraged by the data to date and believe Pfizer remains on track to have a clear sense of the vaccine's profile by the end of October, with potential FDA approval shortly thereafter.”
The analyst believes the vaccine can generate risk-adjusted sales of roughly $1.7 billion next year and $1.2 billion in 2022.
Overall, Divan rates PFE shares a Buy, along with a $43 price target. There’s room for upside of 17% from current levels should the target be achieved in the next months. (To watch Divan’s track record, click here)
The rest of the Street has roughly the same average price target ($43.13), whilst the analyst consensus currently rates the stock a Moderate Buy. The rating is based on 4 Buy and 6 Holds. (See Pfizer stock analysis on TipRanks)
To find good ideas for healthcare stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.