Online gaming platform Roblox (Roblox Stock Quote, Charts, News, Analysts, Financials NYSE:RBLX) has been hovering around the $40 mark for about a year, but don’t expect a breakout anytime soon, according to Roth Capital Partners analyst Eric Handler, who gave a Update ahead of the quarter on Monday. Handler reiterated a “Neutral” rating on the stock and said the narrowing of the EBITDA margin was an issue.

Ahead of Roblox’s first-quarter 2023 financials, due Wednesday before the market opens, Handler said he expects growth prospects to be strong, but perhaps a little less dramatic than previously thought.

Poorer-than-expected booking results are expected for the quarter. The analyst increased its adjusted first-quarter EBITDA estimate to $62 million from $70 million and its bookings to $768 million from $786 million, with its booking call coming in near the upper end of the forecast range Managements, which was quoted in its last monthly update as ranging from $757 million to $773 million. (All figures in US dollars.)

Handler said daily active users (DAU) growth of 66.2 million was stronger-than-expected in the company’s last update, but that increase will most likely be offset by a forecast decline in average bookings per daily active user (ABPDAU) by 1 Percent offset to $11.60. Handler said this would mark the seventh straight quarter of ABPDAU down year-over-year.

“We are lowering our 1Q estimates on weaker than expected booking results for the quarter. However, we continue to expect robust growth of over 20% in 1H23 before more difficult comparisons are made. There is no doubt that the capital expenditures have had a positive impact on the platform’s international expansion and aging audience. However, these initiatives come at a high cost as the Adjusted EBITDA margin continues to decline,” Handler wrote.

With a Neutral rating, the analyst lowered its price target from $45 to $37 per share, with its target based on its 2023 bookings and Adjusted EBITDA estimates, using 7x and 65x, respectively, compared to 8x and 80x previously. At the time of publication, Handler’s new target represented a projected one-year return of 5.6 percent.

“There aren’t any other companies in our video game coverage with booking growth similar to Roblox, but what keeps us marginalized is the lack of clarity as to when stabilization with Adjusted EBITDA or Adjusted EBITDA margin might occur,” said Handler .