Investors seemed to be tuning out Roku (NASDAQ: ROKU) stock in recent trading days. According to data compiled by S&P Global Market Intelligence, they pushed the specialty consumer electronics company's shares down by just under 18% week to date as of Friday morning. An analyst's deep price target cut played quite a role in this.
Tariff and macroeconomic woes
On Wednesday, Jason Bazinet of influential bank Citigroup made quite a significant change to his fair value assessment of Roku.
Bazinet now believes the stock is worth $81 per share, representing a considerable reduction from his preceding level of $103. In making the cut the analyst maintained his neutral recommendation on Roku.
As with numerous other analyst price target reductions Bazinet's was based on the recently introduced tariffs, according to reports, as Roku relies on foreign manufacturers for its hardware. The pundit also expressed worries about a softening macroeconomy, and the potential deleterious effect on the company's business.
A solid discount buy?
Nevertheless, Roku remains an interesting, rather sideways play on the enduring popularity of video streaming services. Aside from its TV set-top devices, the company operates a service-neutral operating system that allows users to transition smoothly between providers. As long as streaming remains a popular entertainment option, Roku should remain an important player in this world.
Does that make it a good investment, though? I would lean toward yes. The habitually unprofitable company is guiding for an operating profit, at least, in 2026, and as it approaches this it has posted some encouraging growth numbers. Its current share price weakness, combined with tepid analyst notes like Bazinet's, make it look like a bargain buy these days.
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Citigroup is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Roku. The Motley Fool has a disclosure policy.
