Investing.com — Rated Buy Roku (NASDAQ: ) has been named a top stock pick for 2025 by analysts at Needham & Company, who see multiple drivers for significant growth in the coming year.
They cite connected television (CTV) ad growth and industry consolidation as key factors that will increase Roku’s value.
The company, which has a $100-per-share target for the stock, listed Roku’s 10 growth drivers for 2025:
Expanding the installed base: Roku’s installed base is expected to grow to nearly 100 million homes, reaching approximately 200 million viewers by the end of 2025.
CTV ad revenue growth: Needham projects industry CTV ad revenue to grow 16% year-over-year to $33 billion. With 100% of Roku’s ad revenue coming from CTV, the company is said to be well-positioned to capitalize on this high-growth segment.
CTV Full Stream Ads: The company believes Roku will benefit from the rapid growth of CTV ads across the stream, which is expected to expand the fastest in 2025.
Monetization of first party data: Roku’s first-party data, which is not separately monetized, represents a hidden asset, according to Needham. Analysts believe that large language models (LLMs) will increasingly value these permissive datasets.
Financial growth: Roku’s free cash flow (FCF) is projected to grow significantly, from approximately $200 million in 2024 to over $320 million in 2025, and Needham expects further growth in 2026.
Direct DSP integrations: Roku is expected to announce more direct deals with demand-side platforms (DSPs), which could accelerate ad revenue growth and improve the sales ratio of its ad inventory.
Income diversification: Roku’s diversification into content licensing and subscription revenues is expected to drive multiple expansion and reduce business risks.
The lowest revenues from media and entertainment (M&E): Needham said that following the decline in M&E ad spend, Roku is projected to see 10% growth in this segment in 2025.
Tough competition: Despite competition from tech giants like Amazon (NASDAQ: ) and Google (NASDAQ: ) , the company notes that Roku has grown its installed base significantly since its IPO.
Device Growth: Retail moves on TV shelves are expected to favor Roku, especially after Walmart acquired Vizio.
