Roku has potential growth areas, but it's in a tough industry and broader economic environment that will make it difficult for the stock to perform, Jefferies said. Analyst Andrew Uerkwitz initiated the stock as a hold with a price target of $45, which implies a downside of 6%. He said the companies growth potential from its operating system and streaming is tempered by an increasingly concerning outlook for advertising revenue. "We appreciate the flywheel of OS, ad network, and its own channel + in early innings of linear ad dollars shifting to CTV," he said in a note to clients. "However, with macro uncertainty for the ad market & the competitive nature of OS and consumer hardware space, we take a more conservative view." Roku aims to see its business compound within its Roku-only channel CTV with help from its advertising platform and its focus on content. Uerkwitz said this synergy could position Roku to be "a leading player in television as it captures share of shifting dollars towards CTV from hardware to subscriptions to ad dollars." More specifically, Uerkwitz expects CTV to be the fasting growing unit when it comes to digital advertising at an 18% compound annual growth rate for the next four years. He said advertisers will like the engagement level with CTV and its new premium services for on-demand videos with advertisements. However, he said there first needs to be a clearer narrative around consolidation within TV operating systems for Roku's strategy to "truly succeed." It's more difficult to see the streaming company's path given the current focus on content and the fact that major publishers already have relationships with linear advertising agencies, he said. The amount of competition in streaming with big names such as Netflix and Warner Bros Discovery' s HBO Max also makes it hard to see Roku as a standout, Uerkwitz said. He said Roku can capture some market share as shifts take place, but will lag behind competitors on the sell side. And Uerkwitz said these issues are only elevated amid broader concerns around advertising revenue slldes within the technology sector more broadly. Meta and Microsoft are among big names that have laid off workers as the sector struggles with slowdowns in advertiser spending and investors look elsewhere. For Roku specifically, Uerkwitz predicted the ad business will decline each quarter in 2023 and come in below Wall Street expectations. The stock has lost about 75.7% so far this year, which Uerkwitz said means there's limited downside potential. The $45 price target, if met, would mean the stock is at about a third of where it was trading in January 2020. That fits that narrative of the tech sector, which has felt whiplash after company shares ballooned during the pandemic but have fallen sharply sharply this year as the economic backdrop changed. — CNBC's Michael Bloom contributed to this report.