Wall Street Analysts Look Bullish on Roku (ROKU): Should You Buy?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Roku (ROKU), and emphasizes the importance of using these recommendations in conjunction with other analytical tools for making investment decisions [1][5]. Brokerage Recommendations for Roku - Roku has an average brokerage recommendation (ABR) of 1.84, indicating a consensus between Strong Buy and Buy, based on recommendations from 30 brokerage firms [2]. - Out of the 30 recommendations, 17 are classified as Strong Buy and 2 as Buy, representing 56.7% and 6.7% of all recommendations respectively [2]. Limitations of Brokerage Recommendations - The article highlights that relying solely on brokerage recommendations may not be wise, as studies show limited success in guiding investors towards stocks with the best price increase potential [5]. - Analysts from brokerage firms often exhibit a strong positive bias due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell recommendations [6][10]. Comparison with Zacks Rank - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, based on earnings estimate revisions rather than brokerage recommendations [8][11]. - Unlike the ABR, which is based solely on brokerage recommendations, the Zacks Rank utilizes a quantitative model that reflects earnings estimate revisions, providing a more timely and balanced assessment of stock performance [9][12]. Current Earnings Estimates for Roku - The Zacks Consensus Estimate for Roku's current year earnings remains unchanged at $0.12, indicating steady analyst views on the company's earnings prospects [13]. - Due to the unchanged consensus estimate and other factors, Roku holds a Zacks Rank of 3 (Hold), suggesting caution despite the Buy-equivalent ABR [14].