Roku Slides After Partner Launches New Android-powered Smart TVs
Shares of Roku (ROKU) are slipping on Wednesday, with Stephens analyst Kyle Evans saying that Best Buy’s (BBY) TCL Android TV models could be pressuring the stock. The analyst believes these to be the first non-Roku powered TCL smart TVs available in the U.S. market. Meanwhile, his peer at SunTrust added that the new Android-powered TCL Smart TVs are priced at the lower end of the HDTV range, which could present "modest incremental competition" for Roku OS Smart TV sales.
'MODEST' NEW COMPETITION FOR ROKU: In a research note to investors, SunTrust analyst Matthew Thornton said he found Best Buy advertising new Android-powered TCL Smart TVs priced at the lower end of the HDTV range, which he views as presenting "modest incremental competition" for Roku OS Smart TV sales. He had written previously that he believes Roku and TCL are no longer exclusive partners in the U.S. Thornton kept a Hold rating and a $110 price target on Roku shares.
Meanwhile, Stephens analyst Kyle Evans reiterated an Equal Weight rating and a $105 price target on Roku, saying that Best Buy's TCL Android TV models could be pressuring the stock. While it is only one channel and not a comprehensive product launch in his view, the analyst believes it is the first non-Roku powered TCL product available in the U.S. market, and that this development could be causing Roku to underperform the market.
Two weeks ago, Evans had downgraded Roku to Equal Weight from Overweight largely on continued TCL concerns. The analyst pointed out at the time that he believed Roku had benefited "tremendously" from TCL's heavy lifting, TCL still wasn’t participating meaningfully in Roku’s downstream advertising/commerce economics and he had gradually grown more concerned with the duration/magnitude of what he believed was Roku overearning versus its most important partner.
PRICE ACTION: In afternoon trading, Roku shares have dropped almost 5% to $105.80.
Disclosure: None.
I have one of those android powered TV's and they suck hardcore. I still use my Roku in the Android interface is terrible. $ROKU