Roku (ROKU) shares are down by 18% since the turn of the year. Yet, 5-star Needham analyst Laura Martin says the bullish case for ROKU is viable.
Addressing recent concerns regarding Roku’s relationship with smart tv partner TCL, Martin deftly swats them away. Fears that Roku is getting more out of the relationship than its partner have raised the prospect TCL might decide the deal is tilted in Roku’s favor and seek to renegotiate terms or partner a rival streaming platform.
However, Martin argues reports that Roku's first UK TV launch partner Hisence has been “getting more shelf space,” at its two largest retailers, Walmart and Costco are a sign the OTT leader remains firmly in control.
“To us,” Martin said, “This implies that Roku is refusing to rev-share with TCL and is redeploying engineers toward Hisence to shift share away from TCL. We believe that no competitor can generate meaningful US ad revenue until it achieves an installed base of over 20mm US homes (Roku has 40mm), so Roku should NOT share its US ad revenue with any TV maker.”
As for ad spend, Martin notes that most in the industry agree April was the bottom, with ad spend stabilizing in May. Other trends highlighted at the conference are in Roku’s favor, too.
While leading brands are reducing ad spend on linear TV, there is a conscious decision to “shift toward targeted ads.”
“Since all of Roku's connected TV ads are targeted,” Martin notes, “This benefits Roku's total addressable market and near-term growth potential.”
Furthermore, CPM (cost per mille) trends indicated that during COVID-19, Connected TV ads had “been the strongest of all ad categories.” This bodes well for Roku, as the bulk of its ad revenue is derived from US Connected TVs.
Martin, therefore, reiterated a Buy on Roku along with a $150 price target. Investors can expect upside of 37%, should the target be met over the next year. (To watch Martin’s track record, click here)
Among the analyst fraternity, opinions are divided on Roku’s prospects. The bulls have the edge as a Moderate Buy consensus rating is based on 7 Buy ratings, 5 Holds and 2 Sells. The average price target is $126.54 and implies possible upside of 16%. (See ROKU stock analysis on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Biotechs on a tear have been a theme in 2020. Most have taken off on the hope of solving the COVID-19 vaccine or treatment conundrum. While not all have shared in the COVID related bounty, others have soared based on the premise of bringing to market other necessary solutions.
Which brings us to Momenta Pharmaceuticals (MNTA). Year-to-date shares are up by 69%, as investors have hopes for the immune disease focused company’s pipeline.
So does Stifel’s Derek Archila. That said, the analyst believes a different company’s recent strong trial data bodes well for Momenta.
On Monday, Argenx SE announced positive results from its Phase 3 study for efgartigimod in myasthenia gravis (MG), an incurable chronic neuromuscular disease. 67.7% of those suffering from the condition achieved improvements in the daily lives after being treated with efgartigimod.
Why is this good news for Momenta? Because the biotech has its own MG treatment in the pipeline, nipocalimab, currently in a phase 2 trial.
Archila said, “We believe the results further validate the anti-FcRn mechanism in MG and increase the probability that nipocalimab will demonstrate positive results in its Phase 2 study expected to read out in the coming weeks.”
Furthermore, Archila argues that Momenta’s offering might have the edge as of all the anti-FcRn therapies in progress, nipocalimab has exhibited the largest reduction in IgG which could “enable it to potentially demonstrate deeper and/or more durable responses on MG-ADL which could lead to better durability/dosing flexibility than efgartigimod.”
Archila’s gives a 55% probability of success for nipocalimab in MG and argues its possible use cases are currently under the Street’s radar.
“We believe nipocalimab's broad potential across multiple IgG-mediated autoimmune diseases remains underappreciated by investors, and we think the risk/reward ahead of data is highly favorable (+85% upside in bull case/-25% downside in our bear case from current levels),” the analyst concluded.
Unsurprisingly, Archila maintains a Buy on MNTA shares, though has no price target in mind. (To watch Archila’s track record, click here)
Over the past 3 months, 3 other analysts have chipped in with a view on the biotech’s prospects -2 saying Buy while the other recommends a Hold. These analysts expect about 21% addition to the current share price, should the $38 average price target be met over the next 12 months. (To watch Archila's track record, click here)
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.