Roku Inc. (NASDAQ:ROKU) shares fell more than 4% on Friday after MoffettNathanson analysts downgraded the stock from Neutral to Sell, slashing the price target to $55 from $75. The revised outlook reflects concerns over Roku’s valuation and increasing pressures across its business segments.

The updated price target is based on a 14x enterprise value-to-EBITDA multiple applied to the company’s projected 2030 GAAP EBITDA, which assumes an 8% margin, discounted back three years. The reduction primarily stems from a lowered EBITDA forecast, highlighting challenges in Roku's long-term profitability trajectory.

Currently, Roku trades at a premium EV/EBITDA multiple, comparable to high-growth peers like Shopify and The Trade Desk on 2027 estimates. However, MoffettNathanson sees this valuation as overly optimistic given the mounting headwinds facing Roku. These include competitive pressures, difficulties in scaling its advertising business, and questions surrounding the platform’s ability to sustain growth.

Recent speculation about a potential acquisition has contributed to a surge in Roku’s stock, but MoffettNathanson dismissed this as unlikely, citing the absence of a clear acquirer and the company’s current market challenges. Even with near-term forecasts exceeding consensus, the analysts consider Roku’s valuation excessive and unsustainable under the current circumstances.