Roku (ROKU -10.29%) ended 2023 on a strong note, but a muted outlook for 2024 scared investors enough to push the stock 24% lower following the fourth-quarter report.

With shares trading around $63 as of this writing, one analyst thinks the sell-off is a fantastic opportunity. Needham analyst Laura Martin has a buy recommendation on Roku and a price target of $100 per share.

Unexpected news has Roku investors even more worried

Roku reported healthy growth for its active accounts, platform revenue, and device revenue in the fourth quarter with all three metrics up 13% to 15% year over year. But a 4% decline in average revenue per use (ARPU) and management's warning in the shareholder letter regarding a "challenging [media and entertainment] environment" in 2024 became the focus for investors.

To make matters worse, Walmart also announced on Feb. 20 that it would be acquiring connected TV manufacturer Vizio for $2.3 billion. If that deal goes through, it turns one of Roku's biggest retail partners into a deep-pocketed competitor. Advertising makes up a major share of Roku's platform segment, which now accounts for more than 85% of the company's top line. Walmart wants in on that advertising opportunity.

Follow Warren Buffett's advice

However, the Needham analyst thinks the dynamics of the Walmart-Vizio deal would actually result in a net positive outcome for Roku. Martin cited Roku's market-leading position as an advantage as the company would face less competition overall for connected-TV advertising dollars. She also noted increased exposure for Roku and less competition from Vizio at other major retailers as a result of the deal.

Per Warren Buffett's famous advice, this appears to be a situation where fearful investors have created a buying opportunity. Roku's free cash flow generation increased steadily in the second half of 2023, and the company says that will continue in 2024 -- the same goes for its revenue growth. If that leads to profitability over time as management has stated, investors may do well to follow the analyst's recommendation and buy Roku stock.