Roblox (NYSE:RBLX)
During premarket trading on Friday, shares of Roblox (NYSE:RBLX) increased by about 3% after the investment firm Jefferies upgraded the online video game business and cited a “favorable narrative” as the reason for the upgrade.
Roblox stock has been upgraded from a hold recommendation to a buy rating by market analyst Andrew Uerkwitz. He also increased his price target for each share to $48. He did so after observing that the company’s revenue is increasing, its net bookings are climbing, and its user metrics are solid.
Uerkwitz said in an investment letter that “with frequent rollouts of new user and creator capabilities, we are confident that [Roblox] will thrive despite [near-term] competitive and macro headwinds.”
Uerkwitz explained that margins are now at an “inflection point,” meaning that they are getting closer to the 10% objective that the management of Roblox appeared to hint at during the company’s analyst day.
Roblox was also referred to as “one of the top online firms” by the analyst, who based this conclusion not only on the platform’s rapid expansion in terms of the number of users and net bookings but also on the fact that it is used just as often as TikTok.
According to Uerkwitz, “to this aim, the top level story is simple: rapidly expanding online firm with imminent margin inflection with an advertising revenue stream call option.”
Roblox is predicted to continue expanding in the “high teens” through 2023, according to Uerkwitz. Wall Street projections will climb higher as the mood gets more favorable. This is despite Epic Games unveiling Fortnite creative 2.0 this weekend and the risk of a weakening economy.
The investment firm Benchmark raised its rating on Roblox stock one month ago, noting the company’s solid fourth-quarter earnings and bookings, in addition to its increasing January indicators.
Featured Image: Megapixl @ Rimidolove
