Roblox (RBLX), Electronic Arts (EA) Cut to Neutral at Goldman Sachs on Post Pandemic Normalization

Goldman Sachs analyst Eric Sheridan downgraded Electronic Arts (NYSE: EA) to Neutral from Buy with a $145.00 per share price target.

“We see EA as a fast growing company with long term margin potential and well positioned to take market share going forward. We see growth mostly driven by their core portfolio, mobile strategy, international expansion, M&A opportunities and organic projects, and long term EBITDA margin expansion to be realized in the out years. With a newly appointed CFO and our own estimates below the Street in the coming years, we are looking for greater clarity on the path for growth and margin trajectory over the long term,” Sheridan said in a client note.

Moreover, the analyst also cut the rating on Roblox (NASDAQ: RBLX) to Neutral from Buy with a $50.00 per share price target (down from $108.00).

“We still see Roblox as growing above industry levels in terms of revenue with a strong long term margin potential. We expect Roblox to grow bookings through DAU expansion, from $2.7bn in 2021 to $6bn by 2026, representing an 17% 5 year CAGR. A mixture of putting the near term headwinds behind the company coupled with continued strong management execution could drive the share’s risk/reward to be more constructive.”

Playtika (NASDAQ: PLTK) is also downgraded from Buy to Neutral with a $22.00 per share price target while Ubisoft (OTC: UBSFY) is downgraded to Sell from Neutral.

Shares of Roblox and EA are down 3% and 2%, respectively, in pre-market Tuesday.

By Senad Karaahmetovic

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