Wall Street Bulls Look Optimistic About Roku (ROKU): Should You Buy?

Core Insights - The average brokerage recommendation (ABR) for Roku is 1.73, indicating a consensus between Strong Buy and Buy based on 29 brokerage firms' recommendations [2] - The ABR consists of 18 Strong Buy and 2 Buy recommendations, accounting for 62.1% and 6.9% of total recommendations respectively [2] - Despite the positive ABR, reliance solely on brokerage recommendations may not be advisable due to their historical lack of success in guiding investors towards high-potential stocks [5][10] Brokerage Recommendations - Brokerage firms often exhibit a strong positive bias in their ratings, with a tendency to issue five Strong Buy recommendations for every Strong Sell [6] - This bias suggests that brokerage interests may not align with retail investors, leading to misleading recommendations [7][10] - The Zacks Rank, which is based on earnings estimate revisions, is presented as a more reliable indicator of near-term stock performance compared to ABR [8][11] Zacks Rank vs. ABR - The Zacks Rank is a quantitative model that utilizes earnings estimate revisions, while ABR is based solely on brokerage recommendations [9] - The Zacks Rank is updated more frequently, reflecting timely changes in earnings estimates, unlike the potentially outdated ABR [12] - Roku currently holds a Zacks Rank of 2 (Buy), supported by a 0.4% increase in the Zacks Consensus Estimate for the current year to -$0.26 [13][14] Investment Outlook for Roku - Analysts' optimism regarding Roku's earnings prospects is indicated by a consensus in revising EPS estimates higher, suggesting potential for stock appreciation [13] - The combination of the recent consensus estimate change and other earnings-related factors has contributed to Roku's favorable Zacks Rank [14]