ROKU Stock Edges Higher Overnight Despite Wall Street Skepticism Over $22B Fox Deal: Retail Bulls Won’t Budge

• Piper Sandler, JPMorgan, Citizens and KeyBanc downgraded Roku, with several firms setting price targets in line with the deal value.  
• Jefferies sees minimal antitrust risk and expects the combined company to become the third-largest player in U.S. TV viewing. 
• Ross Gerber also voiced support for the acquisition. 

Roku, Inc.’s stock edged higher overnight despite a wave of analyst downgrades following its agreement to be acquired by Fox Corp. (FOX, FOXA) for $160 per share, to be paid in cash and stock. 

The roughly $22 billion deal would combine two major TV and streaming companies, creating one of the largest streaming platforms in the U.S. by bringing together services such as Tubi and The Roku Channel. 

Wall Street Downgrades ROKU 

The takeover deal prompted several Wall Street firms to downgrade Roku as the stock price approached the $160 offer price, leaving little room for further gains. 

Piper Sandler, JPMorgan, Citizens, Evercore ISI, KeyBanc and Jefferies downgraded Roku following the announcement, reflecting the view that the acquisition price largely defines the stock’s near-term value.

Piper Sandler downgraded the streaming platform’s stock to ‘Neutral’ from ‘Overweight’ and raised its target to $160. JPMorgan also moved to ‘Neutral’, matching the transaction price with its revised price target. Citizens downgraded Roku to ‘Market Perform’, while KeyBanc adopted a ‘Sector Weight’ rating.

Roku stock rose 0.07% overnight heading into Tuesday. 

Evercore Sees Strategic Benefits In ROKU-FOX Deal

Evercore ISI lowered its rating on ROKU to ‘In Line’ from ‘Outperform’ and reduced its target price to $160 from $185. Analysts at the firm described the transaction's industrial logic as compelling and characterized the agreement as a favorable outcome for investors, although they noted that some may have hoped for a larger premium.

Jefferies also downgraded Roku, moving to ‘Hold’ from ‘Buy’ while lifting its target to $160 from $150. The firm said the proposed combination appears unlikely to face antitrust obstacles due to the complementary nature of the two businesses. 

The combined operation would span broadcast television, cable networks, local stations and streaming services, giving it a presence across nearly every major viewing channel.

Jefferies added that the merged company would rank as the third-largest participant in U.S. television viewing share.

Ross Gerber, chief executive of Gerber Kawasaki Wealth & Investment Management, took to X to support the acquisition. “This deal makes sense. All the data and Roku subscribers to add to the fox mix,” said Gerber. 

What Are ROKU Retail Traders Saying

On Stocktwits, retail sentiment around the stock remained ‘extremely bullish’ with a 952% surge in message volume over the last 24 hours. 

A user said, “While a competing bid is unlikely, the deal still faces hurdles that could scuttle it: Antitrust Risks: Regulators will heavily scrutinize the combination of a major broadcast network and a massive connected TV (CTV) platform. Shareholder Approval: Some Roku investors are underwhelmed by the 11% premium (relative to post-rumor trading prices) and are questioning if it reflects the platform's long-term value.” 

Another user said, “FTC would never allow streaming monopolies like Amazon or Google to aquire ROKU. They would have bought out Roku long ago if FTC would approve it but they won't.”

ROKU stock has gained over 29% year-to-date. 

Also See: Why Did FISV, FOX, LDOS Stocks Plunge To 52-Week Lows Today?

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