Netflix is planning to launch an ad-supported alternative in the coming months, and Atlantic Equities thinks this could lead to big gains for the beaten-down streaming stock. Analyst Hamilton Faber upgraded the stock to overweight and slapped a price target of $283 per share, implying a gain of 26% from current levels. The stock is down about 62.8% since the start of 2022. An ad-supported business "could be extremely material and do not believe the benefit is currently reflected in consensus," Faber wrote Wednesday in a note to clients. Netflix is expected to launch the lower-cost, ad-supported tier in November. The streaming giant was originally opposed to the idea, but leadership wanted to expand "consumer choice" while trying to reverse the first subscriber loss in more than a decade. Ad-tier revenue should surpass $8 billion by 2025, which would account for about 15% to 20% of total company revenue, Faber said. He expects about 80% of revenue from the ad-supported tier to filter down to the company's bottom line. To be sure, expectations could be missed if competition steps up or if the pre-pandemic levels of churn return. But Netflix currently has about seven times more viewers than competitor Hulu, leading Faber to estimate that Netflix's average revenue per user with ads would be about three times that of its Disney -owned competitor. "Given the current US ARPU is $16, that gives the company huge flexibility in offering a low pried ad-supported tier," he said. "It also means that any subscribers that move from ad-free to ad-supported are likely to be highly accretive to total ARPU." Atlantic Equities is not the only firm cheering the new tier. Evercore ISI and Oppenheimer both upgraded the stock to out perform earlier this month, noting the upside of the ad-supported tier. — CNBC's Michael Bloom contributed to this report.