Bull of the Day: Roku (ROKU)

Roku (ROKU) is a Zack Rank #1 (Strong Buy) that is the leading TV streaming platform provider in the United States, Canada, and Mexico based on hours streamed.

Following its descent from pandemic-era peaks, ROKU has consolidated in a broad trading range over the past couple years, with several unsuccessful breakout attempts.

However, the fundamental picture has been improving. Recent quarterly reports have exceeded expectations, generating increasingly positive market reactions that signal shifting sentiment.

With this improving execution and growing investor interest, ROKU is worth watching closely for a potential breakout above resistance and the establishment of a new uptrend in 2026.

About the Company

Serving over 90 million streaming households, ROKU operates through two key segments: Platform and Devices.

The Platform segment derives revenues from digital advertising sales, streaming services distribution, Premium Subscriptions, and branded app buttons on remote controls. Roku's advertising business is growing rapidly driven by monetized video ad impressions on The Roku Channel, fueled by traditional TV advertisers' migration to streaming and ongoing investment in the company's OneView ad platform and ad tech capabilities.

The Devices segment sells streaming players, Roku-branded TVs, smart home products, audio products, and accessories. Roku's streaming household growth comes from multiple channels: stand-alone device sales, partnerships with TV manufacturers like TCL, JVC, and Sharp who license Roku OS for their smart TVs, and licensing agreements with service operators.

ROKU is valued at $13 billion and has a Forward PE of 44. The stock has Zacks Style Scores of “D” in Value, but “A” in Growth and Momentum.

Q4 Earnings Beat

Roku delivered a decisive fourth-quarter beat, 89% above expectations. Revenue came in at $1.39 billion versus the $1.35 billion consensus and adjusted EBITDA surged to $169.4 million, more than doubling from $77.5 million a year earlier.

Platform gross margin came in at 52.8%, while operating expenses declined year-over-year to $541 million from $552 million. Streaming hours reached 145.6 billion for fiscal 2025, up 15% year-over-year.

After achieving Adjusted EBITDA breakeven a full year ahead of schedule in 2023, Roku turned operating income positive in the second half of 2025 and reached net income profitability for the full year. Management also announced progress on its $400 million stock repurchase program, having already bought back approximately $150 million, and signaled a clear path to fully offset dilution in 2026.

Roku's guidance exceeded expectations across the board. For Q1 2026, the company projects revenue of $1.20 billion (versus $1.17 billion consensus) with Platform revenue growth accelerating to over 21% year-over-year and Adjusted EBITDA of $130 million.

Full-year 2026 revenue guidance of $5.50 billion topped the $5.33 billion consensus, with Platform revenue expected to grow 18% and Adjusted EBITDA projected at $635 million. 

Management outlined a path to over $1 billion in free cash flow by the end of 2028, supported by a capex-light model and a greater than $1 billion deferred tax asset.

Estimates Head Higher

Roku has seen a sharp move higher in analyst estimates since reporting earnings.

For the current quarter, estimates have gone from $0.05 to $0.31 over the last 7 days. This is a 520% jump.

For next quarter, we see a 71% move higher, with estimates going to $0.36 from $0.21.

For the current year, estimates have gone from $1.27 to $2.03, a jump of 60%.

The longer-term numbers are shooting higher as well, with estimates for next year going from $2.30 to $3.20, an increase of 39%.

Roku, Inc. Price and Consensus

Roku, Inc. price-consensus-chart | Roku, Inc. Quote

Many analysts have price targets above that $100 level. Rosenblatt Securities has a Buy rating with a $118 target. While Wedbush has an Outperform and $140 target.

The Technical Take

Since 2023, the stock has traded sideways in a large range. The $60 level has been supported and anything above the $110 level is sold. The bulls need that resistance to crack to see the stock return to its glory days.

The recent low was $78.53, which came close to the 61.8% Fibonacci retracement level which can be found by drawing the April 2025 lows to 2025 highs. This support was very bullish and if the stock can get above its moving average the bulls can retake control.

Let us look at those moving averages:

21-day: $95.25

50-day: $103

200-day: $92.80

The Fibonacci level signaled support, so investors might want to consider a starter position. A break above the 200-day would confirm the support and a break of the 50-day would signal a longer-term breakout. Fibonacci targets for this scenario are above the $130 level, in line with that Wedbush outlook.

In Summary

After years of post-pandemic consolidation, Roku appears to be entering a new phase. Execution has improved materially, profitability has returned ahead of schedule, and management’s forward guidance points to accelerating platform growth and expanding cash flow.

Analyst estimates are moving sharply higher, and technical support has held at key levels, suggesting downside risk is becoming more limited.

While the stock has yet to decisively break out of its multi-year range, the combination of strengthening fundamentals, improving sentiment, and constructive technicals positions Roku as a compelling name to watch for a potential trend change and upside in 2026.

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This article originally published on Zacks Investment Research (zacks.com).

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