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Shares of Roku (ROKU) are on the rise on Wednesday, January 6, after the company announced an estimated 51.2 million active accounts for the fourth quarter. Roku also announced an estimated 17 billion streaming hours for the quarter and a total of 58.7 billion hours in 2020, an increase of 55% year-over-year.

On Tuesday, ahead of the pre-announcement, Wells Fargo (WFC) analyst Steven Cahall raised his price target on the shares to a Street-high of $414, citing a "big runway" for the company's average revenue per user in 2021 and beyond, driven by ad-supported video on demand.

51.2 MILLION ACTIVE ACCOUNTS

Roku has announced preliminary estimated data for the fourth quarter ending December 31, reporting 51.2 million active accounts - up by approximately 14 million accounts in 2020. The company also announced an estimated 17 billion streaming hours in the fourth quarter for a total of 58.7 billion hours in 2020, an increase of 55% year-over-year for the quarter and the full year.

"I'm excited that more than 50 million households now turn to Roku for their TV viewing," said Roku CEO Anthony Wood. "The world is moving to streaming and we look forward to continuing to help viewers, advertisers, content publishers, and TV manufacturers succeed in the Streaming Decade." In February, Roku will report final operating metrics and financial results for the fourth quarter and full year 2020.

In a CNBC interview, Roku CEO Anthony Wood said that streaming is "definitely here to stay. But there's still a long way to go. There's a lot of room to keep growing in the streaming business. Cord-cutting is a big phenomenon in the U.S. and will continue."

He added: "In terms of competition, we've always competed with big companies since the beginning. We take our competition very seriously, but results show we're doing a good job. We never said we were going to move into original content. We have the Roku Channel and we try to keep its content fresh. TV is moving to streaming which means all TV advertising is moving to streaming."

Talking about the COVID-19 pandemic, the executive said he wasn't certain "when we will get back into our offices, but we will. We will continue to operate in a similar way we were before the pandemic."

ROKU REMAINS A TOP IDEA FOR 2021

In a research note following the announcement, Benchmark analyst Daniel Kurnos noted that the streaming hours of 17 billion and The Roku Channel households reaching 61.8 billion were both better than expected. Kurnos admitted, however, that in-line results could pressure the shares given the "extremely elevated" expectations, but he continues to call out expectations for Platform upside.

Kurnos would be a buyer of Roku on any incremental weakness. Roku remains one of his top ideas for 2021, with a Buy rating and $410 price target.

TARGET UPPED TO STREET-HIGH AT WELLS

On Tuesday, Wells Fargo analyst Steven Cahall raised the firm's price target on Roku to $414 from $275, while keeping an Overweight rating on the shares. The new price target is a high on the Street, according to Bloomberg. Cahall sees a "big runway" for the company's average revenue per user in 2021 and beyond, driven by ad-supported video on demand.

2020 showed a "big push" into ad-based video on demand as media companies launched more services, added more high-value content, and ad agencies got more accustomed to connected TV as a dedicated marketing channel, he contended. The analyst added that Roku's deal for Quibi content is "supportive of better ARPU growth."

Deutsche Bank analyst Jeffrey Rand also raised his price target on Roku to $400 from $260 and kept a Buy rating on the shares. The analyst has become more positive on the short- and near-term outlook for Roku's Platform business.

Streaming momentum continues and advertising spend for connected TV appears to be holding up during the pandemic, Rand told investors in a research note. The analyst now believes that Roku is likely to outperform its fourth quarter outlook, and sees signs that the momentum toward streaming is continuing, on both the consumer and advertising sides.

PRICE ACTION

In afternoon trading, shares of Roku have gained about 4% to $347.64.