By Sam Boughedda
Analysts at both BofA and Needham raised their price targets on Roblox Corp (NYSE:RBLX) shares Thursday, with one stating that the majority of developers were more positive about the monetization opportunity on the platform now.
Bernie McTernan, an analyst at Needham, raised the price target on Roblox to $45 per share from $40, maintaining a Buy rating on the stock. He said in a note to investors that after they spoke with 17 Roblox developers on their outlook on the current monetization environment, advertising opportunities and the UGC marketplace, the "majority were more positive on the monetization opportunity on the platform now vs last year given the perception of rising engagement and ease of creation."
McTernan continued: "This should allow for the content flywheel to keep spinning as COVID comps ease in 2H22 and RBLX expands monetization initiatives. Speaking with developers on two of these initiatives, advertising expectations could be a source of upside surprise for developer monetization."
Meanwhile, BofA analyst Omar Dessouky also raised the firm's Roblox price target to $45 per share from $40, maintaining a Buy rating.
"We raise our bookings estimates for 4Q22 to 17% Y/Y from 12% Y/Y, and for FY22 to 4% Y/Y from 3% Y/Y," said Dessouky. "On June 28th, RBLX quietly announced the full release of Dynamic Heads, 2-3 months before we had assumed, giving developers time to deploy the technology in their games before Q4. Moreover, gamers will likely be able to buy Dynamic Heads for their Avatars 'later this year.'"
BofA raised its fourth-quarter estimates by about $40 million and "assume no impact to 4Q from a UGC Avatar Bodies release later this year."
However, they "remain cautious on 2Q (and 3Q) as data from SensorTower indicates weakness in Core US/CAN avg. bookings/hour, suggesting games/Avatars did not improve significantly in Q2."