Initial Takeaways from the FOX-ROKU Agreement; ROKU to Neutral

Research evidence excerpt

Initial Takeaways from the FOX-ROKU Agreement; ROKU to Neutral

iel Pfeiffer

will be what multiple is applied toward pro-forma financials, and it’s uncertain at (1-212) 622-0161

this stage whether investors will anchor toward recent FOXA valuation ranges daniel.pfeiffer@jpmchase.com

(~7x EBITDA and ~11x-12x FCF), or award the go-forward company for its Andrew Watts

greater streaming mix (ROKU has traded recently at mid-to-high teens on 2027 (1-212) 622-9400

EBITDA and FCF). andrew.watts@jpmorgan.com

J.P. Morgan Securities LLC

• ROKU: Price Target & Rating Updates. From a Roku perspective, we’re

surprised that the company is a seller right now given its recent business

momentum, with the acquisition price only slightly above our prior December

2026 price target of $150. That said, we see the strategic rationale of a Fox

combination, which has potential to accelerate the company’s Platform

revenue trajectory over time. We’re moving to a Neutral rating (vs. prior

Overweight) and increasing our price target from $150 to $160, which reflects

the agreed per share acquisition price. We’re also removing Roku from our top

picks list. Roku management indicated that the company ran a "thorough and

complete process," and thus we don't think a bid over the top is very likely,

which should result in shares remaining range-bound until the acquisition

closes. Roku shares trading at a 12% discount to the proposed acquisition price

likely reflects the stock portion of the deal (no collar) and regulatory risk, but

we see scope for this discount to narrow as the regulatory process becomes

clearer. We note that the deal price implies a ~22x 2027E adj. EBITDA and FCF

multiple (based on our standalone estimates – not pro forma), which we believe