Analysts with Jeffries are evidently concerned about the risk-reward profile of streaming equipment provider Roku (NASDAQ:ROKU). They downgraded ROKU stock, and today’s financial traders are selling their shares.
Reportedly, the Jeffries analysts lowered their rating on Roku from “hold” to “underperform,” which is similar to a “sell” rating. Their commentary made a direct reference to Roku’s competitors, Netflix (NASDAQ:NFLX) and Disney (NYSE:DIS).
“We do not believe that a significantly slower digital ad market is reflected in NT consensus expectations and the LT trajectory of the business remains unclear,” the Jeffries analysts posited. Thus, digital advertising revenue issues could bring the ROKU stock price down this year.
Moreover, the analysts “expect Netflix and Disney+ to capture majority of the incremental CTV ad spend in 2023 [and] 2024.” Hence, Roku’s financial problems in a competitive field could persist beyond this year.
What’s Happening with ROKU Stock?
By 10:30 a.m. Eastern today, ROKU stock was down between 3% and 4%. It’s possible, then, the Jeffries downgrade took a toll on the Roku share price.
The news hasn’t been all negative for Roku, however. Not long ago, the company announced its global active accounts exceeded 70 million. Not only that, but Roku boasted that its platform “remains the #1 TV streaming platform in the U.S., Canada and Mexico based on hours streamed.”
However, it looks like none of this dissuaded the Jeffries analysts from issuing their downgrade of Roku. In general, the analysts advised investors should focus on safety, as well as on companies with de-risked downside.
Perhaps they’re concerned about the possibility of a steep recession in 2023. Also, the analysts may envision Roku losing market share this year, or financial traders rotating out of technology stocks like they did in 2023. In any case, their pronouncements certainly might have contributed to the price pressure that ROKU stock investors are feeling today.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.