Needham analyst Laura Martin reiterates a Buy rating on the FuboTV Inc FUBO with a price target of $3.00. The analyst said five things she likes most about FUBO as an investment idea for FY 23.
FUBO has always been marketed as a low-cost cable replacement bundle. Martin believes that FUBO's new rights to air will aid the brand promise of the Regional Sports Networks RSN, which have ubiquitous local baseball and hockey games in 2023 and 2024.
Historically, FUBO's focus has been on national rights. FUBO has exceeded its guidance as a public company. Revenue growth will be faster than the sub-growth, according to its 1Q 23 guidance. Since the ARPU has 80% margins, higher ARPUs should drive faster profit growth in FY 23.
Martin believes that price increases for FUBO's core bundle, advertising rev growth and up-selling new products such as multiple simultaneous viewing streams and premium services such as DVD cloud storage drive ARPU growth.
FUBO subs can buy the NFL Sunday Ticket package separately without subscribing to YouTubeTV, the biggest vMVPD competitor, Alphabet Inc GOOG GOOGL YouTubeTV, a company that recently bought the rights to air NFL's Sunday Ticket from DirecTV. YouTubeTV is taking a big financial gamble on super fans of a single sport, the NFL, for about four months a year.
FUBO has 3 -- 5 year deals with each broadcaster, which airs most of the biggest games in every sport. The analyst believes that only one of these large contracts, not NBC, is up for renewal in the next nine months, minimizing gross margin surprises in FY 23.
Asymmetrical data helps FUBO make a profit on content that it knows it can make a profit on. FUBO has 1 st party data about how many hours a user is viewing, so it can pay just enough to maximize its revenues and profits.
Price Action: FUBO shares traded higher by 12.90% at $1.19 on the last check Friday.