Investing.com – Buy recommendation Roku (NASDAQ:) has been named a top stock pick for 2025 by Needham & Company analysts, who see multiple factors for strong growth next year.
They cite growth in connected television (CTV) advertising and industry consolidation as key factors that will boost Roku’s valuation.
The firm, which has a per-share price target of $100 per share, listed 10 growth drivers for Roku for 2025:
Installed base expansion: By the end of 2025, Roku’s installed base is expected to grow to nearly 100 million homes and reach approximately 200 million viewers.
CTV advertising revenue growth: Needham estimates industry CTV advertising revenue will grow 16% year over year to $33 billion. With 100% of Roku’s advertising revenue coming from CTV, the company is said to be well positioned to capitalize on this fast-growing segment.
Full ads on CTV: The firm believes Roku will benefit from the rapid growth of full-funnel CTV advertising, which is expected to grow fastest in 2025.
Monetization of your own data: Roku’s proprietary data, which has not been separately monetized, represents a hidden asset, Needham said. Analysts believe that large language models (LLMs) will increasingly value these permissioned datasets.
Financial growth: Roku’s free cash flow (FCF) is projected to grow significantly, from approximately $200 million in 2024 to over $320 million in 2025, with Needham expecting further growth in 2026.
Direct DSP integration: Roku is expected to announce more direct deals with demand-side platforms (DSPs), which could accelerate ad revenue growth and improve the sales ratio of its ad inventory.
Income diversification: Roku’s diversification into content licensing and subscription revenues is expected to lead to multiple expansion and reduced business risk.
Media and Entertainment (M&E) Revenue: Needham said that after lowering M&E ad spend, Roku is projected to see 10% growth in the segment in 2025.
Sustainable competition: Despite competition from tech giants like Amazon (NASDAQ:) and Google (NASDAQ:), the firm notes that Roku has significantly grown its installed base since its IPO.
Device height: Changes in TV shelf retail are expected to favor Roku, especially following Walmart’s acquisition of Vizio.