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15th May 2022

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Strong Earnings Confirm the Bull Thesis on fuboTV Stock

Heading into Tuesday’s Q1 results, fuboTV (FUBO) stock looked in rough shape. The sports-focused streamer’s decline was swift and brutal. From a height of $62 per share toward the end of last year, the price had collapsed to $14.83 at the open, a decline of 76%.

Accordingly, the stakes were high and had fuboTV disappointed. However, as Evercore’s Shweta Khajuria notes, FUBO delivered nothing less than a “home run.”

Investors were willing to overlook Non-GAAP EPS of -$0.55 missing the consensus estimate by $0.09, as practically all other important metrics improved in a quarter which Khajuria says marked the “first time FUBO achieved sequential subscriber and revenue growth in any first quarter, implying a decrease in seasonality seen in the past.”

Revenue increased by 135% year-over-year and 98% sequentially to reach $120 million, 15% higher than the Street’s forecast. ARPU (average revenue per user) increased by 57% year-over-year and subscription revenue also accelerated, to $107 million, growing by 137% from the same period last year compared to 97% in Q4, while coming in 15% ahead of the Street’s estimate.

However, the “MVP of the quarter” goes to ad revenue, which showed a year-over-year uptick of 206% – 24% above the consensus estimate – to reach $12.6 million.

Many companies have reported excellent quarterly showings this earnings season, only to stumble when providing guidance. Here, FUBO gave investors what they wanted to hear, too.

In Q2, revenue is anticipated in the $120 million to $122 range – consensus had $98.37 million. For FY2021, FUBO now expects revenue between $520 million and $530 million, compared to the Street’s forecast of $472.69 million.

Summing up the performance, Khajuria wrote, “Fundamentals were strong in the quarter (revenue & subscriber growth accelerated, margins improved, and churn decreased for the eighth consecutive quarter) and the company continued to execute well. FUBO is a clear beneficiary of three key industry trends—a) cord cutting, as viewers shift away from linear TV to streaming; b) mix-shift of advertising dollars from linear TV to OTT/CTV; and c) growing demand for sports betting.”

Story continues

To this end, Khajuria rates FUBO an Outperform (i.e. Buy) and has a $30 price target for the shares. The 5-star analyst, therefore, expects the stock to climb by 64% over the coming months. (To watch Khajuria’s track record, click here)

FUBO is beaten down to such an extent, that according to the rest of the Street, the possibility of abundant upside remains. The $38.86 average price target suggests the stock will be changing hands for ~113% premium a year from now. Out of 7 recent ratings, 1 says Hold, while all the rest recommend to Buy, resulting in a Strong Buy consensus rating. (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.

2021-05-13 23:41:00

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By admin