Roku stock sank Friday after investment bank Morgan Stanley cut its price target on the beleaguered streaming video platform.
Morgan Stanley analyst Benjamin Swinburne reiterated his underweight rating on Roku stock and cut his price target to 60 from 65.
However, in a bear case scenario, Roku stock could fall to 35, he said in a client note.
On the stock market today, Roku dropped 0.7% to close at 59.83. Year to date, Roku stock is down 34.7%.
Roku faces a host of headwinds, Swinburne said. Those challenges include soft advertising sales overall and greater competition among ad-supported streaming video services.
Roku Stock Down After Walmart-Vizio Deal
In addition, Walmart's pending acquisition of smart TV maker Vizio will create a formidable rival in the connected TV market.
"We remain underweight (on) Roku as we see limited valuation support (GAAP EPS begins in 2027 in our view), an increasingly competitive CTV advertising market, and risk to medium-term platform segment gross profit expectations," Swinburne said.
In the connected TV advertising market, Roku competes with Amazon, Disney, Netflix, Vizio and others.
Most of the decline in Roku stock came on Feb. 16 after news leaked that Walmart plans to buy Vizio.
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