BofA lifts Roblox stock price target to $79, maintains buy rating

On Monday, BofA Securities increased its price target on Roblox Corp . (NYSE: NYSE:RBLX) shares from $70.00 to $79.00, while keeping a Buy rating on the stock. Currently trading at $71.07 with a market capitalization of $46.64 billion, Roblox has shown remarkable momentum, with an 82% price return over the last six months. According to InvestingPro data, the stock is trading near its 52-week high of $71.89. The adjustment reflects a valuation based on a higher expected enterprise value to forecasted calendar year 2026 earnings before interest, taxes, depreciation, and amortization (EV/CY26E EBITDA) multiple.

Analysts at BofA Securities now apply a 34x multiple on the anticipated $1.6 billion EBITDA for CY26E, an increase from the previous 30x multiple. This change comes despite the EBITDA forecast itself remaining unchanged. BofA’s analysts have noted the market’s recent positive reevaluation of Roblox’s stock, attributing it to the company’s ability to avoid supply constraints in an industry that is currently facing such issues.

The firm’s valuation multiple is in line with other software companies that follow the Rule of 40, which suggests that a company’s combined growth rate and profit margin should exceed 40%. These companies typically have similar market capitalizations and profitability profiles to Roblox.

BofA analysts also highlighted that Roblox might continue to provide conservative growth guidance, giving investors and analysts the flexibility to project their own expectations for the company’s growth in 2025. This strategy appears to be working, as some investors anticipate Roblox’s top-line growth to be in the high-20s percentage range and EBITDA margins in the low-20s percentage range. Recent performance supports this outlook, with InvestingPro data showing revenue growth of 27.98% over the last twelve months, though the company currently operates with a modest gross profit margin of 24.67%. These figures are notably higher than BofA’s and the wider market’s expectations, which are around 21% year-over-year growth and a 20% margin.

Lastly, the report mentions that while BofA does not include any potential advertising revenue in its forecasts for calendar year 2025 or beyond, a significant minority of the investors they have spoken with are factoring in a substantial contribution from advertising to Roblox’s growth in CY25. With analyst price targets ranging from $30 to $82, investors seeking deeper insights can access comprehensive analysis and 13 additional ProTips through InvestingPro’s detailed research reports, which provide valuable context for the company’s current valuation and growth prospects.

In other recent news, Roblox Corp. has been the subject of several noteworthy developments. Hindenburg Research, renowned for its critical analysis of public companies, is disbanding, a move that has brought relief to companies like Roblox that were potential investigation targets. This news has been met with increased investor optimism, as reflected in the modest rise of Roblox’s shares.

Roblox also received a Buy rating from BTIG, a decision influenced by positive indicators such as new account growth and improved user engagement. Moreover, HSBC initiated coverage on Roblox with a Buy rating, citing steady improvements in the company’s virtual world economics. HSBC forecasts significant margin expansion and a decrease in share-based compensation costs over the medium term for Roblox.

Raymond (NSE:RYMD) James, another analyst firm, raised its price target for Roblox and maintained a Strong Buy rating, highlighting strong user growth and strategic changes to the in-game currency, Robux. However, TD Cowen reiterated a Sell rating on Roblox, citing potential risks including a decline in the company’s top grossing ranks on mobile platforms. These recent developments provide a detailed picture of the varying perspectives on Roblox’s future performance.

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