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The firm’s analysts, who have a $60 price target on the stock, explained that Roblox remains a top pick as they see a very attractive, multi-year bookings growth and margin improvement cycle beginning to take shape in the back half of 2023.
“Roblox has begun to deliver new products to their user and developer bases that are likely to improve the overall platform experience—from personalization to monetization to the development experience,” said BTIG.
“Collectively, those improvements should drive sustained, or accelerating top-line growth (we project at least 20% bookings growth over the next two years, but could see growth in the +25-30% y/y range) alongside steady margin improvement from the high single digits in 2023 to the high teens (on a bookings basis) in 2025 after exiting a multi-year investment cycle.”
They noted that products will be the key accelerants to bookings, on top of already strong user growth/penetration, while R&D and ITS will be “significant sources of operating expense leverage moving forward.”
BTIG concluded that they don’t believe the factors are reflected in consensus estimates, and they see a healthy runway for positive revisions.
