-- Roku's (ROKU) Q1 results and guidance reflect the upside to its platform growth strategy, even as the uncertain macro backdrop tightens advertiser budgets, Wedbush Securities said in a note Friday.
The company's accelerating monetization of its ad and subscription platform, improving profitability, and favorable tax position place it on Wedbush's best ideas list, the brokerage added.
Given Roku's expense discipline, the brokerage said it expects the company to achieve its $1 billion free cash flow guidance well before its 2028 target.
Roku's net operating losses will act as a tax shield, allowing pre-tax income to efficiently convert into distributable cash, the firm noted. A clean balance sheet and improving liquidity suggest ongoing share buybacks are likely, according to the note.
Wedbush added that Roku is best-positioned within the Connected TV ecosystem, even amid macro headwinds, as it can meet advertisers across the demand curve.
Wedbush maintained an outperform rating on Roku and raised the price target to $155 from $140.
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