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Analysts at Goldman Sachs raised their rating on Roblox Corporation (RBLX) stock from “Sell” to “Neutral” after releasing its latest financial results and providing a strong outlook. They raised their price target for the next 12 months from $35 to $48.
“We had previously recommended selling the stock due to the negative balance of potential gains and losses,” the analysts said.
However, the financial institution revised its future earnings forecast and its approach to the company’s valuation, noting that Roblox has exceeded expectations in its core business operations. Analysts noted that they now expect a sustained annual growth rate of more than 20% for revenue and profit margins to increase year over year.
“As we look to the future and recognize the potential for further success, we see Roblox as a strong contender in the gaming and interactive entertainment industries. We also recognize its growth potential from the expansion of the virtual world and content creation economy,” Goldman Sachs analysts said. was
On Wednesday, RBLX shares ended the day up 10.2%.
Goldman Sachs emphasized the importance of Roblox maintaining strong performance and effectively monitoring the performance of the platform over the next 12 months. This is necessary to address concerns about a possible decline in growth rates or profit margins.
In related news, analysts at Barclays raised their rating on RBLX shares to “equal weight” from “underweight”. They also raised their price target for the stock to $46 from $26.
“Long-term estimates of 20% compound annual growth rate for bookings and 20% margin for earnings before interest, tax, depreciation and amortization look promising, especially with the potential for advertising revenue in the future,” Barclays analysts noted.
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