Shares of Roku (ROKU) are on the rise after Oppenheimer analyst Jason Helfstein upgraded the stock to Outperform as the "rapid adoption" of the Roku Channel gives him incremental confidence in the channel's ability to garner viewership on different platforms. Further, Helfstein sees Roku leveraging its advantages in pricing and merchandising to remain the market leader in consumer-facing connected television solutions.

BUY ROKU: In a research note to investors, Oppenheimer's Helfstein upgraded Roku to Outperform from Perform and established a $50 price target on the shares, following a 10% decline from its recent high. The analyst pointed out that he believes the Roku Channel is 0.63% of domestic time-spent on Roku's platform, or the 12th most-watched app by viewing hours, which represents a 9M hour monthly run-rate only nine months post-launch. Helfstein argued that the "rapid adoption" of the Roku Channel gives him incremental confidence in the channel's ability to garner viewership on other platforms, such as Samsung (SSNLF) TVs, allowing Roku to monetize a broader portion of the over-the-top ecosystem than he had previously assumed was possible.

Its ability to leverage the Roku Platform is a structural advantage over other AVOD aggregators, he contended, adding that Roku can leverage 5,000 apps already on its platform for content and monetize using existing ad-tech/relationships. Additionally, Helfstein noted that Roku launched an advertising marketplace, allowing publisher partners to leverage Roku's advanced targeting capability on owned inventory. The analyst values the core platform at $44 per share and the off-platform Roku Channel opportunity at $7 per share, which, when combined, represents 18% upside from current share levels. PRICE ACTION: In morning trading, shares of Roku have gained over 6% to $45.97.