Video and mobile games developer Roblox (NYSE:RBLX) got a boost on Friday after Wolfe Research analyst Joshua Tilton upgraded the stock from Sell to Hold. The analyst cited strong bookings and advertising potential as reasons for upgrading the stock.
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At its recent investor day, the company stated that it is targeting bookings growth of 20% between FY25 and FY27. Roblox aims to expand its EBITDA margins between 100 and 300 basis points annually and outlined more details about its advertising opportunity.
Tilton noted that Roblox shares were trading at a 40% premium to its peers. However, the analyst pointed out that the Enterprise value-to-next twelve months sales ratios of RBLX’s peers have risen from 3.6 to 5, while Roblox’s multiple has only gone from 5 to 5.9, an increase of just 19%.
Is Roblox a Good Stock to Buy Now?
Analysts are cautiously optimistic about RBLX stock with a Moderate Buy consensus rating based on 13 Buys and four Holds and Sells each. RBLX stock has rallied by more than 30% year-to-date and the average RBLX price target of $41.47 implies an upside potential of 9% at current levels.
