Benzinga | Dec 8, 2021 12:16PM EST

Analysts Hail Roku-Google Deal; See Up To 119% Upside

* Analysts were optimistic that Roku Inc (NASDAQ: ROKU) and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) Google had reached a multiyear distribution agreement for both YouTube and YouTube TV apps to make them accessible on the Roku operating system.

* Stephens analyst Nicholas Zangler said, "details are scarce." However, the agreement should permit Roku to collect origination fees on new YouTube TV originations.

* The analyst, who also contends that YouTube app-accessibility will deter customers from choosing an alternative TV/OS at the point of purchase, keeps an Overweight rating and $475 price target on Roku shares, implying 119.3% upside.

* Truist analyst Matthew Thornton views the development as a positive that removes a critical short-term overhang. Without YouTube, Roku OS TVs could have been perceived as being at a disadvantage to other TV platforms.

* Thornton views the impact of this deal on Roku's competitive positioning and share of smart TVs as more important than the direct net economics from YouTube TV.

* He keeps a Buy rating and $360 price target on Roku shares, implying a 66.2% upside.

* Price Action: ROKU shares traded higher by 15.3% at $249.76 on the last check Wednesday.