Benchmark analyst Mike Hickey reiterated Roblox Corp (NASDAQ: RBLX) with a Buy and a $46 price target.
The San Mateo, California-based company looks to announce its fiscal fourth quarter 2023 financial results on Feb. 7. It will also provide formal guidance for the fiscal first quarter of 2024 and the full year of fiscal 2024.
The analyst maintained a positive outlook on Roblox's long-term growth potential. Hickey anticipates:
- Robust revenue increases
- Promising advertising prospects
- Improved profitability
- Strong cash flow generation
The analyst highlighted that key drivers include expansion into markets like India, Japan, Germany, and Brazil, extending to gaming consoles, attracting older gamers, and developing a $1 billion advertising business.
Positioned at a crucial point, Roblox can capitalize on AI advancements to enhance game development, safety, quality, and marketing, he said.
Despite economic challenges, it shows resilience with significant revenue growth worldwide, seemingly recession-proof.
The company's commitment to financial guidance attracts long-term investors, Hickey says. Its strong financials, including a solid balance sheet and positive cash flow, highlight its stability and expansion potential.
Roblox's launch on Sony PlayStation has been a resounding success, ranking third in player engagement behind only Fortnite and Call of Duty, signaling a new era of growth for the popular gaming platform, the analyst said.
This strategic move, part of Roblox's continuous growth and innovation, enhances its appeal among existing fans and attracts new players, Hickey added.
The analyst flagged the company's expansion efforts to various other platforms, including Nintendo Switch, which CEO Dave Baszuki has hinted.
After third-quarter financial results, Roblox expressed confidence in meeting the current consensus estimates for net bookings of $1.065 billion (consensus: $1.073 billion) and an adjusted EBITDA of $173 million (consensus: $191 million).
Roblox's fiscal 2024 guidance targets include bookings of $4.03 billion (consensus: $4.06 billion) and adjusted EBITDA of $490 million (consensus: $511 million), translating to an adjusted EBITDA margin of 12%.
Price Action: RBLX shares traded higher by 1.54% at $41.10 on the last check Tuesday.