Wells Fargo downgraded Roku to Equal Weight from Overweight on Friday, saying the streaming platform's strong second-quarter results had lifted its estimates but left limited upside to its valuation as the company moves toward its planned acquisition by Fox Corp. Wells Fargo cut its price target to $165 from $167, valuing the stock at $96 per share in cash and $69 in Fox stock under the proposed deal, which it expects to close in the first half of 2027 with limited risk and no new bidder emerging. The brokerage raised its 2026 and 2027 revenue estimates by 3.8% and 4.6%, respectively, to $5.76 billion and $6.45 billion, and lifted its 2026 adjusted EBITDA estimate by 12% to $761 million while cutting its 2027 estimate to $837 million from $869 million. Roku's second-quarter platform revenue rose 25% year over year to $1.22 billion, beating Wells Fargo's estimate by 4%, with adjusted EBITDA of $254.3 million and free cash flow of $280.9 million. Wells Fargo also flagged pressure on device margins from higher chip and memory costs and noted the second-quarter device gross-profit beat included an estimated $38 million pretax tariff refund.
Roku IncWells Fargo downgrades Roku to Equal Weight and cuts price target, citing limited upside after strong Q2 results.
Fox Corp Class AFox is acquiring Roku; deal terms and expected close mentioned, but no direct impact on Fox's own valuation.
Wells Fargo & Company