Video game developer Roblox (RBLX) saw its shares fall sharply last month after the company announced it was cutting its bookings guidance growth outlook for 2024 from 20% to 15%.
Despite this, analysts at Bank of America remain bullish on the stock, saying another guidance for this calendar year (CY) is “highly unlikely.”
As such, the bank reiterated a Buy rating on the stock on Thursday and raised its Q2 bookings estimates.
Analysts now expect Roblox’s booking to grow 17.5% year-over-year (yoy) in the second quarter from 15% based on their “view that core markets will remain at +20% Y/Y for the balance of 2Q.”
“We are well above the high end of guidance (+15.3% Y/Y) and the highest Factset consensus estimate (+14.9% Y/Y),” analysts said.
“We remind investors that RBLX said on its Q1 call that US/CAN bookings growth in the last half of April and early May had recovered to above 20%,” they added.
BofA’s team also hiked its CY24 growth estimate for to 17% year-over-year from 16.5% year-over-year. They attribute this slight increase to the potential that Roblox may not yet declare "mission accomplished" on its search and discovery upgrades.
This is due to two main factors: the company will have only 15 weeks of data before its next guidance, and the search and discovery improvements have not yet been rolled out to some non-core regions, analysts noted.