On Monday, Seaport Global Securities revised its rating on shares of fuboTV (NYSE:FUBO), elevating the stock from a Neutral to a Buy position, and setting a new price target of $2.50. The upgrade follows a notable fluctuation in the company's share price last Friday, initially surging 17% after fuboTV reported a beat on fourth-quarter 2023 revenue, net additions, and adjusted OIBDA.
However, the gains were later pared back with a decrease of 8% as the market's focus shifted back to top-line and subscriber growth, which appeared to be a priority for investors.
Seaport's analyst cited the attractive risk-reward balance for fuboTV shares, particularly for investors with an interest in small-cap stocks and those who are agile in their trading strategies. Despite guidance metrics for the first quarter of 2024 and the full year falling short of the firm's expectations, the analyst acknowledged that their adjusted OIBDA estimates remain unchanged, reflecting significant progress in expense management.
The new price target of $2.50 is derived from a blend of a 1x multiple of the company's projected 2024 revenue, which suggests a valuation of $4.70 per share, and a discounted cash flow valuation of approximately $1 or more. This DCF valuation also factors in an estimated net present value (NPV) of fuboTV's net operating losses (NOL) of around $1 to $1.50 per share.
The analyst recognized that while some investors may be looking for more robust top-line growth to reignite their enthusiasm for the stock, the downside appears limited regarding fuboTV's antitrust lawsuit against the Sports Streaming JV announced last month.
Moreover, the company's advertising revenue is on an upward trajectory, keeping pace with its digitally native and connected TV video ad sales peers. Additionally, the report notes that fuboTV's margins are improving rapidly, even as this comes at the expense of a slower subscriber growth pace.
InvestingPro Insights
Following Seaport Global Securities' upgrade of fuboTV (NYSE:FUBO) to a Buy position, InvestingPro data and tips provide further context to the company's financial landscape. With a market capitalization of $568.51 million, fuboTV's valuation reflects its position in the market. The company's revenue has grown by 35.64% over the last twelve months as of Q4 2023, indicating a solid increase in sales. However, the gross profit margin stands at a lower 6.3%, suggesting challenges in maintaining profitability against revenue.
InvestingPro Tips highlight several aspects that investors may consider. Analysts are optimistic about sales growth in the current year, which could be a positive sign for future revenue streams. On the other hand, fuboTV is quickly burning through cash and has weak gross profit margins, which could raise concerns about the company's financial sustainability. Additionally, the stock is trading at a low revenue valuation multiple, which might attract investors looking for undervalued opportunities.
For investors seeking a more comprehensive analysis, InvestingPro offers an additional 13 tips on fuboTV's financial health and market performance. These insights can be accessed through the platform's dedicated page for fuboTV at https://www.investing.com/pro/FUBO. Interested readers can use the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing even more value to their investment research.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.