Brokers Suggest Investing in Roku (ROKU): Read This Before Placing a Bet

Core Insights - The average brokerage recommendation (ABR) for Roku (ROKU) is 1.91, indicating a consensus between Strong Buy and Buy based on 30 brokerage firms' recommendations [2] - The ABR consists of 16 Strong Buy and 2 Buy recommendations, accounting for 53.3% and 6.7% 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 analysts tend to exhibit a strong positive bias in their ratings, with five Strong Buy recommendations for every Strong Sell recommendation [6] - This bias suggests a misalignment of interests between brokerage firms and retail investors, potentially misleading investors regarding future stock price movements [7][10] Zacks Rank Comparison - Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, which are strongly correlated with near-term stock price movements [8][11] - The Zacks Rank is more timely and reflects current business trends, unlike the ABR which may not be up-to-date [12] Earnings Estimates for Roku - The Zacks Consensus Estimate for Roku has increased by 28.2% over the past month to -$0.19, indicating growing optimism among analysts regarding the company's earnings prospects [13] - This increase in consensus estimates has contributed to a Zacks Rank of 2 (Buy) for Roku, suggesting a favorable outlook for the stock [14]