Roblox earns two upgrades following Q4 beat, shares jump 10%: 4 big analyst picks

Investing.com — Here is your Pro Recap of the biggest analyst picks you may have missed since Friday: upgrades at Roblox, Ally Financial, Spirit AeroSystems, and IDEX.

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Roblox upgraded at two firms following a Q4 beat

Roblox (NYSE:RBLX) received two upgrades after exceeding consensus expectations for Q4 earnings, leading to a pre-market share price surge of over 10% today.

Barclays raised its rating on Roblox to Equalweight from Underweight and set a new price target of $46.00, up from $26.00, noting accelerating growth in users, bookings, revenue, and expanding margins.

Goldman Sachs also upgraded Roblox to Neutral from Sell, with a revised price target of $48.00, up from $35.00. The analysts remarked that Roblox's Q4 earnings, consistent with the outlook shared during its recent November 2023 Investor Day, showed significant momentum in user growth, an aging player base, and increased monetization per user. The analysts acknowledged the early positive signs in advertising but noted the company has yet to hit the materiality threshold to provide more disclosure around the advertising initiative.

Looking long term with a nod to the upside case, we still see Roblox as a well-positioned company in the gaming/interactive entertainment space as well as an emerging thematic player around the metaverse and creator economy themes.

Ally Financial gains on Morgan Stanley upgrade

Ally Financial (NYSE: NYSE:ALLY) shares rose more than 2% pre-market today after Morgan Stanley upgraded the company to Overweight from Equalweight and raised its price target to $47.00 from $37.00, as reported in real-time on InvestingPro.

The analysts emphasized Ally Financial's significant potential for growth due to its favorable position in a declining interest rate environment. According to the analysts, Ally stands out in Morgan Stanley's coverage as the prime candidate to benefit from lower rates, owing to its substantial portion of fixed-rate loans (74% of its loans, primarily in auto) and its faster-moving funding costs (about 90% of its funding comes from deposits, with 63% in Online Savings Accounts, checking accounts, and Money Market Accounts).

Two more upgrades

TD Cowen upgraded Spirit Aerosystems (NYSE:SPR) to Outperform from Market Perform with a price target of $35.00 (from $27.00). As a result, shares gained more than 2% pre-market today.

The analysts pointed to the stabilized production of the 737 and a moderated production ramp-up as positive developments following the Alaska MAX 9 incident. These factors, along with an expected Airbus price negotiation and big inventory turn opportunity, are expected to lead to a strong rebound in FCF.

Stifel upgraded IDEX (NYSE:IEX) to Buy from Hold with a price target of $265.00 (from $215.00).

After a challenging 2023, we see a return to growth in 2H24 with upside to current guidance from market recovery, strong margin expansion ahead with typically high incremental margins early in the cycle, and a return to double-digit organic earnings growth in 2025. Significant balance sheet capacity can add meaningfully to long term earnings growth.

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