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On Thursday, BMO Capital Markets sustained its optimistic stance on Roblox Corp . (NYSE:RBLX) ahead of the company’s expected first quarter earnings report. BMO analyst Brian Pitz upheld an Outperform rating on the stock, with a steady price target of $75.00. The optimism appears well-founded, as InvestingPro data shows Roblox has delivered impressive returns, with the stock up 81.5% over the past year and 51.9% in the last six months. Pitz cited strong user engagement and strategic positioning in the face of industry challenges as key factors underpinning the positive outlook for Roblox.
The analyst pointed out that despite certain adversities such as tariffs, the release of Grand Theft Auto VI, and a PlayStation network outage, Roblox’s robust engagement trends are indicative of its resilience and potential for strong performance in the upcoming earnings. InvestingPro data reveals the company has maintained strong revenue growth of 28.7% over the last twelve months, though it currently trades slightly above its Fair Value. Furthermore, Pitz acknowledged that while the ramp-up of advertising on the platform has been slower than initially anticipated, recent developments, including partnerships with Google (NASDAQ:GOOGL) Ad Manager and DoubleVerify (NYSE:DV), demonstrate Roblox’s dedication to expanding its advertising capabilities.
Pitz emphasized the significance of these advertising integrations as a means to monetize the platform’s engagement, particularly for the nearly 80% of daily active users (DAUs) who do not make purchases on Roblox. The analyst believes that this focus on monetization is a promising sign for the company’s long-term growth prospects.
Despite the slower advertising progression, BMO Capital has not altered its estimates for Roblox. The firm’s reiterated Outperform rating and $75 price target reflect confidence in the company’s strategic direction and its ability to capitalize on its strong market position. As Roblox prepares to release its first quarter earnings on May 1st, investors will be watching closely to see if the company’s performance aligns with BMO’s expectations. InvestingPro subscribers can access additional insights through the comprehensive Pro Research Report, which includes 8 more ProTips and detailed analysis of Roblox’s $43.4B market cap business.
In other recent news, Roblox Corporation has announced a significant partnership with Google to introduce a new video advertising format, aimed at expanding its advertising business. This initiative allows users to earn in-game rewards by watching video ads, making Roblox’s ad offerings more accessible to a broader range of advertisers. The company’s collaboration with data measurement firms like Cint, DoubleVerify, and Nielsen is designed to help brands measure the effectiveness of their campaigns on the platform. Additionally, Roblox has hinted at introducing other ad formats, such as billboards, to Google Ad Manager soon. In analyst coverage, BofA Securities maintained a Buy rating on Roblox, with a price target of $79, citing the company’s strong execution capabilities and growth potential. Meanwhile, FBN Securities initiated coverage with a Sector Perform rating and a $65 price target, acknowledging Roblox’s robust business model and potential for sustained growth. BMO Capital Markets also reiterated an Outperform rating with a $75 target, highlighting the platform’s appeal to developers and potential for advertising revenue growth. These developments indicate Roblox’s strategic moves to diversify its revenue streams and strengthen its position in the gaming industry.
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