fuboTV: Great Company, Fairly Valued Stock

Shares of sports-centric streaming platform fuboTV (FUBO) have mostly been on a tear since the turn of the year, rising nearly 75%. Like other stocks which have skyrocketed recently, FUBO is a name with high short interest with many betting against the comapny’s continued success.

However, there is a big difference between FUBO and the majority of companies who have benefitted from the recent short squeeze mania. While FUBO has attracted its fair share of detractors, it is by no means struggling. It is a company showing signs of healthy growth and earmarked by several prominent Wall Street analysts as a potential winner in a rising secular trend – the shift from linear TV to CTV (connected TV).

Wedbush analyst Michael Pachter is amongst the fans.

“With its positive Q4:20 pre-announcement in early January, mid-January announcement on advancing its sports wagering business, and late January cash infusion, we are optimistic about fuboTV’s near-term prospects,” the analyst said.

Pachter expects “cord-cutting and cord-shaving” to subsist, and in fact, predicts a generational shift, believing a “sizeable portion of the population will grow up as ‘cordnevers.’” This younger generation will likely forego pre-determined MVPD (multichannel video programming distributor) programming, instead opting for “customizable bundles of content.”

In this respect, says Pachter, fuboTV is “well-positioned with its ‘lead with sports’ strategy and competitive pricing to compete for a favorable share.”

And the audience with an appetite for such services is only growing. Pachter estimates the addressable market currently numbers 30 million, but over the next 10 years, expects the audience to increase by 3 million each year.

FUBO appears to be taking advantage of this shift and is currently growing its subscriber base at a faster pace than anticipated. The company recently pre-announced 4Q20 results and said it will see out the year with more than 545,000 subscribers, significantly above its prior guidance of 500,000 to 510,000 subscribers.

Pachter believes there’s plenty more room for growth and thinks FUBO “can grow its subscriber base by 50% or more per year for the next several years, reaching 5% of the addressable market for cord-cutters by FY:23.”

Accordingly, Pachter retains his positive opinion on the stock with a Buy rating. However, following the recent surge, his $50 price target suggests shares will remain range bound for the foreseeable future. (To watch Pachter’s track record, click here)

Overall, FUBO’s rising share price has left the analysts playing ‘catch up,’ as the $39.28 average price target suggests shares will decline by ~19% over the next 12 months. The anticipated downturn is somewhat ironic, as the stock’s Moderate Buy consensus rating is mostly backed by bulls; barring one Hold and Sell, each, all 7 other recent reviews say Buy. (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.