Needham analyst Laura Martin reiterated the Buy rating on FuboTV Inc (NYSE: FUBO), lowering the price target to $2 from $3.
Martin maintained the fiscal year 2024 estimates but revised the fiscal year 2025 projections due to increased marketing costs in a more competitive environment compared to the previous fiscal year.
FuboTV is also likely to bear the brunt of higher cash costs attributable to the lawsuit it has filed against the new ESPN virtual MVPD.
For the second quarter, the analyst sees revenue of $402.3 million (up 29% year over year), with Subscriptions revenue of $346.2 million (up 20%), and Advertisements rev of $25.4 million (up 10%).
The analyst sees FuboTV as an inexpensive way for public investors to participate in the US consumer shift toward OTT and Streaming TV.
Per the analyst, FuboTV's strategic strengths lie in several key areas: a strong emphasis on sports-focused marketing, accounting for 96% of viewership each quarter; efficient revenue streams through skinny bundle economics; technological prowess in its stack; potential for increased advertising revenue and profitability; exclusive use of CTV ad units; a subscriber base primarily comprising affluent and loyal male demographics; direct customer engagement; and the advantage of selling two minutes of ads per hour, around the clock.
While FuboTV prioritizes expanding its subscriber base, the analyst underscores the company's lucrative additional revenue streams like premium tier upgrades, advertising, and channel fees.
From a valuation perspective, Martin considers FuboTV to be attractively priced compared to other publicly traded streaming companies.
Price Action: FUBO shares are trading lower by 6.14% to $1.230 at last check Friday.