fuboTV: Breaking Down Needham’s Bullish Call

If you’re looking for a growth stock casualty amongst the many whose valuations have plummeted recently, look no further than fuboTV (FUBO). The stock is down over 50% from February highs.

The depressed share price might be a bad look, but none of the fundamental reasons for owning the stock have changed, says Needham’s Laura Martin.

The 5-star analyst rates FUBO a Buy along with a $60 price target. Investors are looking at gains of a massive 171%, should Martin’s thesis pan out over the next 12 months. (To watch Martin’s track record, click here)

So, what does Martin like about FUBO?

Well, for starters, there’s the fact Fubo participates in a secular trend – namely the anticipated growth of the CTV (connected TV) industry.

According to eMarketer, US CTV homes will grow from 104 million in 2020 to 110 million by 2023, providing FUBO with roughly 2 million homes a year of potential new subscriptions.

What’s more, faster TAM (total addressable market) expansion could be provided by the fact CTV users are growing faster than CTV homes. eMarketer comes handy here too, forecasting that CTV users will increase from 207.6 million users in 2020 to 223 million users by 2023.

With the rise of CTV viewership, more ad spend is expected to be allocated to the segment. CTV advertising is expected to more than double from $9 billion in 2020 to $21 billion in 2023, according to another eMarketer stat.

“FUBO benefits from this trend as 100% of its ad revenues are CTV ads,” Martin said. “FUBO gross margins on these ads are approximately 80%, which drives gross margin expansion.”

Advertisers are particularly keen to get their products on Fubo, says Martin, as the viewership is among the “the hardest to reach – wealthy young men.”

Roughly 70% of FUBO subs are men, and approximately 70% are between the ages of 18 and 34.

“This is a very valuable target demographic for advertisers,” Martin noted, “And the narrowness of FUBO’s audience suggests minimum waste by advertisers trying to reach FUBO’s type of audience.”

Furthermore, online sports wagering is expected to reach $155 billion by 2024. This is important as FUBO will soon be integrating wagering into its platform, which will make it a “key beneficiary of this revenue stream over the next 3-5 years.”

While Martin is the Street’s most fervent FUBO bull, her take is no anomaly; barring 1 Hold and Sell, each, all other 7 ratings say Buy. The stock’s Moderate Buy consensus rating is backed by a $42.61 average price target, suggesting gains of 96% in the year ahead. (See FUBO stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.