AT&T outperformed the broader market in 2022, and a Wells Fargo analyst sees the "momentum sustaining into 2023."

On Tuesday, Eric Luebchow raised his rating on the telecom stock to Overweight from Equal Weight. The rationale for the move rests on two pieces of data: free cash flow and earnings before interest, taxes, depreciation, and amortization, or Ebitda.

The analyst said in a research note that Wall Street's consensus for both measurements are on the decline, and he sees an upside to the lowered expectations.

AT&T (ticker: T) stock was up 1.2%, to $19.27 by mid-day Tuesday. The stock lost 1.33% in 2022 compared with the S&P 500's nearly 20% fall. Luebchow raised his price target to $22 from $17.

As of Tuesday, the analyst consensus for AT&T's fiscal 2023 free cash flow was $16.59 billion, down from the $18.28 billion predicted in September, according to FactSet. Luebchow estimates $16.9 billion in cash flow, while AT&T is targeting $20 billion.

The cash flow will give AT&T flexibility to use capital for growth, and "share repurchases could start to become part of the conversation with [AT&T] shareholders later in 2023," the analyst said.

Fiscal 2023 Ebitda estimates at $42.82 billion, or 2.5% growth from a year earlier, have also fallen from consensus expectations in mid-2022, although the current Street consensus forecast is slightly higher than fall predictions.

Either way, "we feel confident that [AT&T] can sustain mid-single digit Ebitda growth in 2023, particularly as it sustains momentum in its wireless business from another strong year of subscriber growth in 2022," said Luebchow.

In the third quarter , AT&T reported 708,000 in postpaid phone net adds, a term used for customers who pay a monthly bill. That beat the 552,300 Wall Street predicted. The second quarter postpaid net addition of almost 1.1 million was also more than the 546,000 expected. The company reports earnings for the fourth quarter and full year on Jan. 25.

Analyst Joseph Bonner of Argus Research also upgraded AT&T last month to Buy from Hold, citing strong growth potential partly due to its performance in the current macroeconomic environment.

Not everyone is bullish, though. Overall, four out of 27 analysts rate the stock as Sell or the equivalent. Another 11 are bullish, and 12 sit on the sidelines.