The worst is over for Roku shareholders this year, according to one Wall Street firm.

Morgan Stanley raised its rating to equal-weight from underweight for Roku shares, citing the company’s strong performance in growing its streaming platform.

“Roku benefits from strong secular tailwinds as consumer behavior shifts from viewing TV over traditional distribution (e.g. free-to-air broadcast, cable/satellite/telco) to ‘over-the-top’ (OTT) internet video consumption, indicating potential upside to account growth and the time spent per account,” analyst Benjamin Swinburne said in a note to clients Tuesday. “With shares now down over 25% and core fundamentals consistently coming in ahead of our prior expectations … we view current valuation levels at ~6.5x ’19E platform sales as more balanced.”

Roku shares are up 2.2 percent in Tuesday’s premarket session after the report. The company sells streaming video players and licenses its operating system to television manufacturers, which enables consumers to watch video content over the internet.

Swinburne increased his price target to $38 from $32 for Roku shares, representing 1.4 percent downside to Friday’s close.

The analyst noted the company reported active account growth above his expectations over its last three quarters. He believes Roku can grow its active account user base by 20 percent annually over the next five years to 45 million users.

“Roku’s platform business has outperformed our expectations to date,” he said. “Roku’s earnings story is about advertising, which is still in its early stages, with low visibility into the monetizable hours streamed on the platform.”

The company’s stock is down 25.6 percent this year through Friday versus the S&P 500’s 1.8 percent return.

— CNBC’s Michael Bloom contributed to this story.