Why Did Morgan Stanley Double-Upgrade ROKU?

• Morgan Stanley said it expects 2026 to be a strong year for the advertising industry spending due to digital strength.
• The firm added that connected TVs should be the fastest-growing area in a healthy advertising market.
• Roku, based in San Jose, California, is a smart TV developer and also makes streaming players, smart home products, and other audio solutions.

Shares of Roku Inc. (ROKU) were up nearly 5% in Tuesday’s pre-market trade after they received a double upgrade from Morgan Stanley.

According to TheFly, Morgan Stanley upgraded Roku to ‘Overweight’ from ‘Underweight’. The firm also hiked the stock's price target to $135 from $85, implying an upside of 24% from Monday’s closing price.

Explaining its double upgrade, Morgan Stanley said it expects 2026 to be a strong year for the advertising industry spending due to digital strength. The firm added that connected TVs should be the fastest-growing area in a healthy advertising market.

Roku, based in San Jose, California, is a smart TV developer and also makes streaming players, smart home products, and other audio solutions.

Retail sentiment on Stocktwits around Roku trended in the ‘bullish’ territory. The ROKU stock was the seventh-most-trending ticker on the platform at the time of writing.

Retail Investors’ Take

Retail users on Stocktwits expressed their optimism around the company following the double upgrade and bullish commentary from Morgan Stanley. One bullish user noted that “platform margins matter more than hardware noise.”

Another user called it a “huge upgrade,” but tempered their optimism, stating that the stock’s gains have fizzled out in the past.

One user called it a “great day” for the stock given the broader market’s movements. “Slowly but surely this name is gaining respect,” they said.

Roku’s Recent Announcements

Roku launched its connected TV (CTV) advertising platform in Brazil in October, as part of its broader international growth strategy. The company said it would allow advertisers to run targeted in-stream ads.

Earlier this year, Roku expanded its content offering by launching 30 FAST channels in its Live TV Guide, providing live options at no cost. This includes a wide selection of free live content, including sports, news, music, telenovelas, and more.

Roku announced its third-quarter (Q3) results in October, reporting earnings per share (EPS) of $0.16 on revenue of $1.21 billion, compared to Wall Street expectations of an EPS of $0.09 on revenue of $1.21 billion.

ROKU stock is up 47% year-to-date and 31% over the past 12 months.

Also See: Why Wharton's Jeremy Siegel Believes Powell's Conceptual Shift On Inflation ‘Matters Enormously'

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