Roblox (NYSE:RBLX) saw a solid 1.4% surge in premarket trading on Friday following an upgrade by Wolfe Research, lauding the video game company for its steadfast bookings growth that has exceeded expectations.
Joshua Tilton, the analyst at Wolfe Research, raised the rating on Roblox (RBLX) shares to peer perform from underperform and highlighted the robustness in bookings and the potential in advertising, which were previously viewed unfavorably by Wolfe.
During its investor day earlier in the week, Roblox (RBLX) revealed its plans for fiscal 2024 and beyond, targeting a 20% bookings growth from fiscal 2025 to 2027. Also, it aims for annual EBITDA margin expansion between 100 and 300 basis points and further outlined its advertising opportunity.
In addition, Roblox (RBLX) has announced it will start providing quarterly and full-year guidance.
Tilton underlined that while Roblox (RBLX) shares were trading at a 40% premium to competitors like Take-Two Interactive (TTWO), EA (EA), and Unity Software (U) during its downgrade, their EV/NTM sales multiples have surged by 40% from 3.6 to 5. Meanwhile, Roblox’s multiple has only increased from 5 to 5.9, representing an increase of just 19%.
Expressing confidence in Roblox’s (RBLX) medium-term outlook and a better growth profile than its rivals, Tilton emphasized that the current premium on Roblox and more is well deserved.
Analysts remain cautiously optimistic about Roblox (RBLX). Seeking Alpha authors rate it as a HOLD, while Wall Street analysts consider it a BUY. Conversely, Seeking Alpha’s quant system, which consistently beats the market, rates RBLX as a HOLD.