Stock picking

This discount stock could rise 625% by 2026 (according to Cathie Wood)

This discount stock could rise 625% by 2026, according to Cathie Wood's forecast.
In the investment landscape, the advice and strategies of Ark Investment Management, which she leads, are followed with great attention as they often identify stocks characterized by disruptive innovation and large growth potential.
To give a few examples, names such as Tesla and Nvidia stand out in its portfolio.
The company in question operates in the streaming field, and according to Wood's bold predictions, investors should seriously consider including these stocks in their portfolio.
This is Roku.
But is it really possible for this prospect to come true or is it an unrealistic hypothesis? In this article we will look at the reasons behind this prediction and the financial outlook of the industry in which the company operates.
Roku Business Profit Roku, the leading streaming platform in North America with a 50% market share, is also expanding its presence in Latin America and Asia Pacific.
Its intuitive interface and wide range of devices contribute to its global dominance.
Strategically positioned in the face of growing cable TV churn, Roku is already capitalizing on the shift in consumer habits.
The company is capitalizing on the growing trend of streaming and declining pay-TV subscriptions, expected to fall to 35% by 2027 from 50% in 2022, according to eMarketer.
The preference for streaming, which offers a superior consumer experience, looks set to persist.
The move to streaming is encouraged by flagship services such as YouTube TV and Amazon Prime Video.
Roku's active accounts have been steadily growing, reaching 75.8 million in the third quarter, up 16% year over year.
The platform scores 26.7 billion hours of streaming, indicating growing viewer loyalty.
That's why the ideal time to invest in Roku stock is now, with a stock that, while posting a solid performance in 2023, remains significantly below its all-time high, offering a profitable opportunity for investors.
Ark Forecasts Ark Investment Management has come up with an ambitious projection for Roku, suggesting a 625% increase.
However, three scenarios are considered in the valuation model, based on revenue growth as the macroeconomic context changes: Base scenario at $605 (+625%), bullish at $1,493 (+1,690%), bearish at $100 (+20%).
Despite Ark's optimistic forecasts, the streaming company had to deal with several economic challenges last year that affected its revenue, which grew by only 13%.
Analyst estimates point to gradual growth, but it is unlikely to reach $14 billion by 2026 as expected in the base case.
Investors should carefully consider these challenges when evaluating Ark's projections.
According to the Tip Ranks consensus based on ratings provided by 24 Wall Street analysts, Roku's 12-month price target stands at approximately $85, with a range between $55 and $115.
Latest Roku quarterly Roku's financial results for the third quarter of 2023 show growth of 20%, with revenues of $912 million.
The number of active accounts increased by 16%, confirming the growing interest in the platform.
Although the value of Roku shares has doubled since the beginning of the year, from $41.70 to $84.40, it is still far from the all-time high of 2021.
However, the current valuation, with a price/sales multiple of 3.5, suggests a significant growth potential.
The continued expansion of the platform and the goal of achieving positive adjusted EBITDA by 2024 add further investor confidence.
Despite macroeconomic challenges, Roku's leadership in the streaming industry, favorable valuation and efforts to improve profitability paint a promising picture in the medium to long term.
This could be a good time to pick up Roku stock at a discount before the market fully recognizes its potential.
read also 3 shares to buy in November with the buy the dip strategy DISCLAIMER The information and considerations contained in this article must not be used as the sole or main support on the basis of which to make investment decisions.
The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon.
The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to public savings.

Author: Hermes A.I.

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