This analyst just upgraded Roblox

Roth Capital Markets analyst Eric Handler upgraded Roblox (Roblox Stock Quote, Chart, News, Analysts, Financials NYSE:RBLX) to “Buy” from “Neutral” in a February 9 sales analysis and raised his 12-month price target to US$84.00 from US$78.00, citing stronger-than-expected 2026 bookings guidance, a projected greater than 20% bookings CAGR over the next several years, and a materially more attractive valuation.

“Most important, we are increasingly appreciative of the underlying mechanics of the platform having created a strong, sustainable virtuous circle where continuously improving creator and development tools are producing higher quality games, which enhances the user experience and drives higher engagement,” Handler said.

The revised target is based on 2026 enterprise value multiples of 7x EV/bookings and 28x EV/Adjusted EBITDA.

Roblox closed out 2025 with its fourth consecutive major quarterly beat, reporting fourth-quarter bookings of $2.22-billion, up 63% year over year, and Adjusted EBITDA of $699-million, up 83%, well ahead of both Roth and consensus expectations. Handler said results were driven by 69% growth in daily active users and an 88% increase in hours engaged, with strong momentum across all regions, particularly Asia-Pacific and Europe. While geographic mix created a modest headwind to average bookings per DAU, operating leverage was pronounced, with gross margin expanding 120 basis points to 80.3% and operating expense growth trailing bookings growth. Adjusted EBITDA margin expanded to 31.4%, well above Handler’s prior estimate.

Following the results, Handler raised his 2026 forecasts, now projecting bookings of $8.56-billion, up 26%, and Adjusted EBITDA of $2.18-billion, representing a 26% margin, both modestly above the high end of company guidance. The revisions reflect higher expected DAU growth, now forecast at 28% to 170 million by year-end, and a smaller decline in average bookings per DAU than previously assumed. He expects margin expansion in the first and fourth quarters of 2026, offset by investment-related compression in the middle of the year.

Handler said Roblox’s momentum continues to be reinforced by rapid innovation across creator tools and platform infrastructure, which is enabling more sophisticated games and deeper engagement. Growth among users aged 18 and over remains a key driver, with that cohort up 50% year over year in 2025 and monetizing at meaningfully higher levels than younger users. New capabilities such as scalable interactive models, server authority, texture streaming, and AI-enabled creation tools are broadening the platform’s appeal to genres such as shooters, role-playing games, and sports titles.

He also pointed to improving discovery and engagement features, including algorithmic recommendations and enhanced matchmaking, which are supporting broader participation beyond the platform’s top titles. Handler noted that experiences outside Roblox’s top 10 games accounted for more than half of Robux spending growth in the fourth quarter, while the top 1,000 creators earned an average of $1.3-million in 2025, up more than 50%year over year.

From a valuation perspective, Handler said Roblox’s multiples have compressed sharply despite rising earnings power. Over the past six months, EV/bookings and EV/Adjusted EBITDA multiples have declined by more than 60%, even as 2026 bookings and EBITDA estimates have increased 41% and 56%, respectively. At current levels, Roblox trades at approximately 5.5x 2026 EV/bookings and 21.8x EV/Adjusted EBITDA, which Handler views as compelling for long-term investors.

Handler now expects Roblox to generate approximately $2.18-billion in Adjusted EBITDA on revenue of $8.56-billion in fiscal 2026, improving to about $2.71-billion in Adjusted EBITDA on revenue of $10.37-billion in fiscal 2027, reflecting the upward revisions to both periods.

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