By Senad Karaahmetovic
Jefferies analysts upgraded Roblox (NYSE:RBLX) stock to Buy from Hold with the price target raised by 60% to $48 per share.
They see a favorable narrative, which is painted by top line growth with margin inflection and an advertising option. Moreover, the analysts highlight strong net bookings expansion and underlying user metrics.
The upgrade move comes after analysts reviewed their prior RBLX thesis, which prompted them to change their minds.
“It's an internet company not a gaming company: The motivation to play RBLX, the social nature of the recent new features, and the creator aspect of play combined with recent outperformance in both net bookings and user metrics vs. traditional game companies leads us to this new narrative,” Analysts said in an upgrade note.
Following the narrative change, they now claim Roblox is “one of the best internet companies.”
“This new narrative is a strong one — even compared to other internet companies — Roblox is one of the fastest growing (users and net bookings) and most used services (average time spent on Roblox is better or in line with time spent on TikTok).”
The new price target implies a 20% total return, which is seen as a “favorable” risk-reward at current levels.
Roblox shares are up over 3% in pre-market Friday.