There are many growth-oriented stocks that have taken a beating in 2021 after rising dramatically in the year of the pandemic. Possibly few have surged and crashed quite as spectacularly as fuboTV (FUBO). Since peaking at $52.4 per share in early February, the selloff has been brutal; FUBO stock now sits 70% below that landmark.
The interesting part, however, is that in the interim there hasn’t really been any change to the FUBO story. Heading into today’s earnings report, Wedbush analyst Michael Pachter finds several reasons why the sports-focused streamer’s valuation is “attractive.”
“The combination of fuboTV’s FY:21 revenue guidance for over 60% growth, its robust Ad ARPU growth demonstrated throughout FY:20, its advances in the sports wagering market, and its late-January cash infusion drive our optimism about the company’s prospects,” Pachter said.
The analyst expects Q1 revenue to hit $103 million. The Street has $104 million while FUBO’s guidance calls for revenue between $100 and $103 million. In-line with guidance, Pachter anticipates Q1 paid subscribers of 530,000, and ARPU of $61.46 “driven by a 13% YoY increase in subscription ARPU to $56.24 and a 15% YoY increase in Ad ARPU to $5.22.”
After raising estimates for “various expense line items,” the analyst predicts adjusted EBITDA of $(56) million (compared to $(27) million before). The consensus estimate is $(39) million.
Looking ahead, FUBO will launch a FTP (free-to-play) wagering app in Q3 and a sportsbook will be added in Q4. At launch, Pachter anticipates the sportsbook will most likely rake in only “minimal revenues.” However, the analyst thinks the creation of a free-to-play product available to all consumers has the “potential to drive word of mouth about fuboTV and ultimately could serve as a catalyst to drive new subscribers.”
With this in mind, over the next several years, Pachter is optimistic the sportsbook can “drive material revenues and profitability.”
All in all, Pachter rates FUBO shares an Outperform (i.e. Buy) along with a $53 price target. If correct, the analyst’s objective could deliver one-year returns of 224%. (To watch Pachter’s track record, click here)
Pachter is by no means a lone FUBO bull. The stock’s Strong Buy consensus rating is based on 6 Buys vs. 1 Hold. The average price target stands at $45.43, suggesting 12-month upside of a handsome 178%. (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.