Despite Yahoo's strong push last year to improve products and services, growth in its core businesses of display advertising and search are still below industry rates, Squali said in his note.
Display revenue ex-tac (traffic acquisition costs) decreased 2.6 percent year over year last quarter to $391.7 million and search ex-tac rose 4.7 percent to $427.7 million, according to Cantor Fitzgerald's estimates. These rates pale in comparison with its competitors, Squali said in the note.
The clock is now ticking for the company to start monetizing its investments.
"While 2013 represented a year of right-sizing, investment and acquisition, we think 2014 should be the year where monetization efforts drive a resumption in top-line growth, starting with 1Q:14," Squali said in the note.
"In the meantime, prospects for the highly anticipated Alibaba IPO this year, continued cost containment efforts, a recent stock pullback and a buyback make for an attractive valuation, in our view."
The tech company is expected to report earnings of 37 cents per share on revenue of $1.08 billion, according to analysts surveyed by Thomson Reuters. Last year the company reported earnings of 38 cents per share on revenue of $1.07 billion.
Yahoo's Japan assets and a lower tax rate helped Yahoo post a 20 percent earnings surprise last quarter when it reported earnings of 46 cents per share, beating analysts' average estimate of 38 cents per share.
Yahoo's own forecast is expecting revenue within $1.12 billion to $1.16 billion, with EBITDA in the $290 million to $330 million range. The company didn't respond to a request for comment.
—By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.