MW FuboTV could offer 'substantial upside' amid battle against Disney, Fox and WBD, says Wedbush
By James Rogers
FuboTV has launched a lawsuit to block the new sports-streaming joint venture from Disney's ESPN, Fox and Warner Bros. Discovery
FuboTV Inc., which is fighting a high-profile battle against a joint venture from rivals Walt Disney Co., Fox Corp. and Warner Bros. Discovery Inc., has plenty to offer investors, according to analysts.
The sports-first TV-streaming company could offer "substantial upside if Fubo can stand against skinny bundles," Wedbush analyst Michael Pachter wrote in a note released Monday.
Earlier this year FuboTV $(FUBO)$ filed a lawsuit to block the new sports-streaming joint venture from Disney's DIS ESPN, Fox FOX and Warner Bros. Discovery WBD, which is scheduled to premiere this fall.
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Related: FuboTV CEO slams 'pernicious' rivals Disney, Fox and WBD amid streaming lawsuit
FuboTV CEO David Gandler slammed the rivals' "pernicious practices," when the company reported its fourth-quarter results last week. He added: "We are asking for an opportunity to compete fairly as a business, and to offer consumers a streaming option that gives them the channels they want, and at a fair price."
While the lawsuit has garnered a great deal of attention, Wedbush said it is encouraged by FuboTV's renewed focus on improving its ad sales, on increasing ad inventory, on cost-efficient regional sports networks and on minimizing expenses.
"After years of increasing losses, 2023 was the inflection point where Fubo focused on optimizing per-subscriber metrics on both a revenue and cost basis, reducing cash burn, and inching toward profitability," Pachter wrote. "Even with more modest subscriber growth expectations given the proposed Disney-Fox-Warner Bros. Discovery sports bundle, we think Fubo can still reach profitability by 2025, as it guided."
Related: FuboTV sues to block ESPN, Warner, Fox sports-streaming venture
"Fubo faces high content costs either way but is attempting to slash these with a favorable lawsuit outcome," the analyst added. "Without a win, costs will remain high. But with a recovering advertising market, tailwinds from political spending and the Olympics, and a still-favorable package of sports, news, and entertainment channels, Fubo should continue to expand subscribers by at least mid-single digits annually, off of its small base."
Wedbush reiterated its outperform rating and $5 price target for FuboTV.
On Monday Seaport Research Partners upgraded FuboTV to a buy rating with a $2.50 price target. "We think the risk-reward in FUBO shares is attractive from here, suited to investors who can focus on small-caps and who can be nimble in their trading," wrote Seaport analyst David Joyce.
Related: Amid 'streamflation,' consumers are spending more on TV streaming than ever
FuboTV has a market cap of $597.32 million. Of nine analysts surveyed by FactSet, four have a buy rating, four have a sell rating, and one has a hold rating for FuboTV.
The company's shares have fallen 44.9% in the last three months, compared with the S&P 500 index's SPX gain of 11.8%. The company's stock is up 2.6% in premarket trades Monday, after ending Friday's session down 8.2%, registering its biggest daily percentage decline since Feb. 7, 2024.
-James Rogers
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March 04, 2024 09:53 ET (14:53 GMT)
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