Morgan Stanley upgrades Roku: Sees multiple tailwinds ahead

Investing.com -- Morgan Stanley upgraded Roku to Overweight from Underweight in a note on Tuesday, citing a more constructive outlook for U.S. advertising and accelerating growth opportunities in connected TV.

Analyst Thomas Yeh told investors that the firm sees “a strong year ahead for U.S. ad spend,” raising its 2026 U.S. advertising growth forecast by 150 basis points to 10.5% on “digital strength.”

The analyst added that connected TV is expected to be “the fastest area of growth in a healthy ad market,” supported by the continued migration of sports, political and major event advertising.

Against this backdrop, Morgan Stanley upgraded Roku and raised its price target to $135 from $85, saying it sees upside to consensus.

“We see multiple tailwinds supporting upside to Roku’s Platform revenue growth in 2026 and beyond, leading us to raise estimates for reported Platform revenue growth to +19% (vs. our prior forecast and consensus at +15%),” wrote Yeh.

He added that the firm’s earlier Underweight stance was based on concerns that “rising competition in ad-supported streaming may limit Roku’s ability to sustain growth as a first-party publisher,” particularly via The Roku Channel.

However, the firm now believes that “the size of Roku’s user base, the deepening of its streaming partnerships, and execution on new monetization opportunities suggest growth accelerates in ’26 and likely ahead of consensus expectations.”

“Given still early stage GAAP profitability, we believe sustained Platform revenue growth remains the key driver for valuation,” Morgan Stanley concluded.

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