Roblox (RBLX) has the "most compelling growth opportunity" in the video game sector thanks to the company's large and increasing user base, Wedbush said Thursday in a note to clients.

The investment firm also highlighted Roblox's "slate of new and upcoming products" as well as the "potential to unlock additional profit drivers within its business."

Roblox has started "monetizing a large percentage of its non-payers through advertising," Wedbush said, adding that the company has disclosed a new video ad format in partnership with Alphabet's (GOOG) Google that is expected to boost advertising revenue growth starting in Q2.

Additionally, the company is "offering content partners a higher revenue share on in-app purchases, which will likely attract higher-quality content to the platform," the note said.

The investment firm said it's forecasting Roblox to grow 20% year on year in 2025, 2026, and 2027, which is in line with the company's 20%-plus guidance.

The firm added it expects Roblox to report "solid" year on year growth when it releases its Q1 results on May 1.

Wedbush has kept its outperform rating and 12-month price target of $83 on Roblox.

Price: 64.52, Change: +1.04, Percent Change: +1.64