Sam Boughedda

Investing.com — Roku Inc (NASDAQ:) shares have fallen over 5% Wednesday after analysts at research firm Atlantic Equities initiated the stock with an underweight rating.

Hamilton Faber, an analyst, set $136 as a price target for the stock. This is well below its current $211.23/share price.

Faber said in a research paper to investors that account adds are likely to fall below current expectations, due to low penetration of markets other than the U.S.

Faber explained that Roku has 80% of its active accounts in America. That translates into 34% penetration there and 6% in all other markets it operates in (Canada Mexico Brazil Brazil France France and many other Latin American countries).

According to the analyst, Roku currently accounts for 38% U.S. smart television sales. Atlantic predicts that U.S. penetration could reach 40% by 2025.

We estimate that the annual US additions will fall from an estimated 8 million in 2019, to an average of 2.33m, over the next four-years. From around 2m, in 2019, we anticipate international will see an average of 3.2m annual adds. Faber stated that we expect global adds to average 5.5 million over the next 4 years, with 8m by 2022. This is substantially below our consensus of 10.5million.