Roblox's (RBLX) offer to content partners for higher revenue share on in-app purchases will likely attract popular game franchises, establishing Roblox as a "bona fide games platform" with a growing user base, Wedbush said in a note Friday.

"We believe that Roblox presents the most compelling growth opportunity in the video game sector given its large and expanding user base, its slate of new and upcoming products, and the potential to unlock additional profit avenues within its business," Wedbush analysts said in the note.

Wedbush said it expects Roblox, which is scheduled to report Q3 results before the market opens on Oct. 31, to "comfortably" achieve its profit target for the quarter. Wedbush analysts estimate bookings at $1.025 billion and adjusted earnings before interest, taxes, depreciation and amortization at $155 million, above consensus of $1.023 billion and $152 million, respectively. Roblox had guided for $1.0 billion to $1.025 billion in bookings and $135 million to $155 million in adjusted EBITDA.

Wedbush also expects the company's management to maintain its 2024 guidance of $4.18 billion to $4.23 billion in bookings and $640 million to $680 million in adjusted EBITDA. Wedbush's estimates are $4.23 billion and $680 million, compared with consensus of $4.226 billion and $662 million.

Wedbush maintained an outperform rating on Roblox with a 12-month price target of $49.

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