Roblox
snagged two upgrades from analysts a day after the online-gaming company posted mixed results for its first quarter.
“We are taking a more constructive view towards Roblox (ticker: RBLX) following comments from management that increases in headcount and compensation will soon be slowing,” wrote Roth MKM analyst Eric Handler in a Thursday report. “This action should create an inflection point in 2024 with adjusted earnings before interest, taxes, depreciation, and amortization returning to growth, adjusted Ebitda margin expanding, and free cash flow returning to positive territory.”
Handler lifted his rating on Roblox stock to Buy from Neutral, increased bookings and adjusted earnings estimates, and raised his price target to $48 from $37.
Shares of Roblox gained 5.5% to $41 in Thursday trading.
Roblox founder and CEO David Baszucki was upbeat on the company’s advertising operations on the earnings conference call Wednesday. “What is much bigger and more disruptive is the notion of gently offering advertisers the ability to bring people to their experience and explore it in 3D. We’ve already shared some of our partnerships,
Nike
(NKE), Vans World, Gucci Garden, the NFL experience. These are called portal ads, and these allow in a native noninvasive way for users who are hanging on Roblox who might want to jump into that experience, to go there and experience it,” he said.
Benchmark analyst Mike Hickey on Thursday wrote, “We’re encouraged to see Roblox begin testing on an advertising business, where we are optimistic, particularly on the portal advertising model where they have realized some early success.”
Hickey upgraded Roblox stock to Buy from Hold, and initiated a $45 price target on shares.
On Wednesday, the company reported a first-quarter loss of 44 cents a share, wider than the loss of 37 cents analysts had penciled in, according to FactSet. In the year-ago period, the company lost 27 cents a share.
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