11:08 AM EDT, 10/28/2024 (MT Newswires) -- Roblox ( RBLX ) has been added to Wedbush's Best Ideas List, with the firm forecasting that the company's revenue growth will surpass industry averages for the next three years, citing "continued traffic growth," increased advertising, and the "potential for adding recurring revenues from season passes" as key factors.

"Advertising could grow to $50 million or more per quarter next year, bringing its contribution to roughly 500 bps. We expect advertising growth to give management the confidence to guide to 20% or more growth for the next two years," Wedbush said in a note Monday.

Roblox ( RBLX )' advertising segment is expected to contribute an additional $127 million in 2025 and $148 million in 2026, according to Wedbush. A significant growth opportunity lies in Roblox's ( RBLX ) new developer pay structure, which offers lower fees to developers who bring their audience to the platform, Wedbush said.

Wedbush expects Roblox ( RBLX ) to surpass Q3 guidance, driven by strong in-app purchases and advertising revenue recognition. The firm also anticipates upward revisions to the company's annual guidance.

"If Roblox ( RBLX ) revises guidance upward, we expect a material positive impact on its share price," Wedbush said.

Roblox ( RBLX ) is scheduled to announce Q3 results on Thursday.

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

Roblox ( RBLX ) shares were up 1.2% in recent trading.

Price: 42.80, Change: +0.66, Percent Change: +1.57