Wedbush analysts believe Roblox Corp (NYSE:RBLX) is the most compelling growth opportunity in the video game sector.
In a note to clients on Friday, the analysts cited the company’s recent hit games driving “massive” platform growth, its slate of new and upcoming products and investments, and the potential to unlock additional profit drivers within its business as it continues to expand as reasons for their optimism.
“Roblox’s Q3 (financial results) clearly underscores our optimism, with its record-breaking results, showing massive engagement growth and improved monetization globally," they wrote.
The analysts noted that Roblox’s fourth-quarter guidance was “essentially very positive”, albeit with a softer margin than they had anticipated.
The Wedbush equity research team believes Roblox is taking the necessary steps to drive its business forward, and they anticipate modest EBITDA (earnings before interest, taxes, depreciation, and amortization) margin dilution in 2026, followed by a resumed expansion after that.
Wedbush analysts maintained their ‘Outperform’ rating and 12-month target price of $165 on Roblox stock.
Roblox shares eased 0.3% to $112.66 in late-morning trading on Friday.