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Roku Inc. has experienced tough times recently, but it could be poised for better days, according to an analyst.

BofA Securities’ Ruplu Bhattacharya bumped his rating on the stock up two notches Friday, to buy from underperform, writing of the “fundamentals bottoming out” for the streaming company, which reported fourth-quarter results earlier in the week.

Read: Roku stock soars after earnings as consumers stream more than expected

The company appeared to be outperforming the weak ad market, in his view, a signal of the Roku
ROKU,
-1.64%
platform’s strong position. Additionally, ad spending in categories like restaurants and travel seems to be reaching a bottom, meaning there will be ample room for improvement as the year goes on.

Bhattacharya suggested that Wall Street expectations for Roku’s 2023 user growth might be too pessimistic. The consensus view called for fewer than 1 million net additions in the first quarter and 7.2 million for the full year. Levels “have not been this low since 2017,” he wrote, and Roku has the benefit now of being in more regions.

New initiatives could also come to benefit the company, he noted, as Roku is making plays in the world of smart-home equipment, including cameras and doorbells.

Bhattacharya had an $85 price objective on the stock, which is off 1.9% in Friday trading after surging more than 11% in Thursday’s session and powering 12% higher in Wednesday action.

Others remain more cautious.

“A more rapid top-line recovery combined with clear leverage on the cost base would help us value ROKU off of some even medium-term profit base,” wrote Morgan Stanley’s Benjamin Swinburne in a Thursday note to clients. “Today that is difficult to do given the lack of visibility we have into the major drivers of Platform revenues,” as well as “significant” outlays for operating expenses, cash content, and capital expenditures.

Swinburne had an underweight rating on Roku’s stock, though he upped his price target to $50 from $45 Thursday.

Shares of Roku have lost more than half their value over the past 12 months, though they were up 69% to start 2023.

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