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Investing.com -- Oppenheimer lifted its rating on Roblox Corp (NYSE:RBLX) shares to Outperform with a price target (PT) of $70. The upgrade comes in the wake of a recent decline in the stock, which has plummeted 24% since February 5.
The pullback “has created an excellent entry point for long-term investors,” said Martin Yang, senior analyst at Oppenheimer.
Yang highlighted several key points for the bullish outlook. The analyst expects revenue from programmatic video ads, a result of Roblox's partnership with Google (NASDAQ:GOOGL) Ad Manager, to reach a $100 million run-rate by the fourth quarter of 2025 and exceed $200 million by the fourth quarter of 2026.
He also noted strong user engagement in the first quarter of 2025, with average concurrent user growth reported at 30% year-over-year, suggesting that bookings will surpass the company's guidance of 22% year-over-year growth.
Oppenheimer sees long-term potential in Roblox's event strategy, despite mixed feedback from a recent platform event. The event, ‘The Hunt: Mega Edition, ’ helped Roblox achieve all-time records for concurrent users.
“It's only been a year since RBLX revived the platform event feature, and we expect it to keep experimenting with the feature and create more unique, massive online social experiences no other gaming platform could replicate,” Yang wrote.
Regarding the valuation, Oppenheimer's price target is based on a 29x multiple of the estimated 2026 adjusted EBITDA of $1.56 billion. This target multiple is set against Roblox's four-year average forward EV/EBITDA multiple of 46 times and a median of 23.5 times for a comparable peer group.
The brokerage justifies a slight premium to the peer median multiple, given Roblox's emerging advertising business, sustainable user growth trends, and substantial long-term monetization potential.
Overall, Oppenheimer considers Roblox “one of the most exciting profitable growth stories in the interactive entertainment industry.”