Roku Handed Amazon A Powerful Ad Edge—Acquisition Odds Jump, Analyst Says

Roku Inc (NASDAQ:ROKU) has inked a strategic partnership with Amazon.com Inc (NASDAQ: AMZN).

The success of the partnership increases the probability of Amazon acquiring Roku at the end of its exclusivity period, according to Needham.

The Roku Analyst: Analyst Laura Martin maintained a Buy rating and price target of $88.50.

The Roku Thesis: The firm could transition to a platform and data company due to the deal that gives Amazon's DSP (demand-side platform) exclusive access to all of Roku's 80 million homes in the U.S. and 150 million logged-in CTV viewers for an estimated three years, Martin said in the note.

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The odds of Roku being acquired by Amazon increases, as the ecommerce giant may want to "continue to control Roku’s CTV ad inventory," she added.

"AMZN and Roku have complimentary ad reach, because AMZN targets homes above the U.S. average household income of $80,000, while Roku targets homes below the U.S. average household income, we believe," the analyst wrote.

While Roku’s deal with Trade Desk Inc (NASDAQ:TTD) is for ad units only on The Roku Channel, the deal with Amazon "is more far-reaching across Roku’s entire CTV platform," she further stated.

ROKU Price Action: Shares of Roku were down 0.8% to $81.45 at the time of publication on Tuesday.

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