Here’s the Bull Case for Roku Stock With Double-Digit Upside

There are brands that become so entrenched in everyday life that it simply makes all the sense in the world to consider them in an investment portfolio. Disruption is unlikely, and even new competitors will arguably have a hard time taking market share from the products and services that consumers are so used to and loyal to by now. Today, investors have a chance to pick up one of these names before it keeps on running higher.

As part of the technology sector, this stock has seen its stock price drop by double-digits over the past quarter as the aftermath of the new trade tariffs rolled out by President Trump has made a wave of uncertainty and volatility in the space.

However, this is where savvy investors can come to realize that not all stocks in this area are as affected as the rest of the group, creating a case for swift recoveries down the line.

The stock in question is Roku (NASDAQ:), which is now a brand that most consumers can find across most TV sets and has widely become a requirement on smart TVs today. Thanks to its seamless integration across the streaming and entertainment ecosystem, the company has layered convenience upon convenience, effectively bridging service providers and in-home delivery for customers.

Roku’s Discount Won’t Last Long

After a decline of as much as 25.5% over the past quarter, an argument could be made as to whether Roku has discounted some of its greatest features and fundamentals, dragged lower by the broader association with the technology sector’s decline. A few factors would prove this right.

Starting with the underlying drivers within the latest quarterly financials, investors can see up to $1 billion in revenue reported for Roku, translating into 16% growth over the past 12 months alone. This attractive growth rate shows Roku’s adoption and market share in the United States, but it is also the way this revenue comes in that matters.

By having a subscription-based business model, Roku is able to forecast future financials on a more stable basis, allowing for reinvestment schedules to push growth further into the next gear. This is one key metric investors can note: a near tripling of free cash flow, calculated as operating cash flow minus capital expenditures.

Free cash flow matters because it allows management to keep reinvesting in growth initiatives, pay down debts, and even initiate a dividend or buyback program to further deliver on shareholder value. However, none of these are front and center for management yet, as the company is still navigating its growth spurt stage.

Net profitability is the focus today, as Roku reported a net loss per share of $0.19 for the latest quarter. However, it has all the right components to achieve net earnings per share (EPS) in the near future. This might be one of the reasons why, along with its discount, some institutional buyers decided to buy up shares of Roku recently.

Optimism Grows for Roku Stock

As of May 2025, those from the Vanguard Group decided to boost their holdings in Roku stock by as much as 2.1%, bringing their net position to a high of $880.7 million today, or 8.6% ownership in the company. This can be taken as a sign of confidence and confirmation of an apparent discount by retail investors moving forward, but that’s not all.

Most Wall Street analysts are careful about boosting a stock when it has reported the sort of bearish price action that Roku has, which is why investors won’t see many upgrades from the crowd, though there is one exception today. Realizing this powerful brand’s true value and satisfying financial performance, Daniel Kurnos from Benchmark decided to reiterate his Buy rating on Roku.

Not only did this analyst take a risk by going against the crowd, but he also placed a $130 per share price target on Roku stock, calling for as much as an 82% upside from where the stock has fallen to today. This sort of risk-to-reward ratio in the stock can also give investors reason to believe that the worst might already be priced in and behind Roku’s story moving forward.

There is one more sentiment indicator to consider here. Markets are willing to pay up to 4.2x in price-to-book (P/B) compared to the average 1.5x multiple in the TV services industry. This is a major difference-maker, and most investors would shy away from believing that the stock is now expensive.

There is always a good reason for the market to pay up for the stocks it believes can outperform the peer group and the broader market, and in the case of Roku, all the reasons (fundamental and financial) seem to be as present as ever to deliver this double-digit upside view to investors.

Original Post