FuboTV (NYSE:FUBO) shares rose on Friday as investment firm Wedbush Securities upgraded the connected streaming company, noting the recent decline in the stock has provided investors with a "compelling entry point."
Analyst Michael Pachter moved his rating on FuboTV (FUBO) shares to outperform from neutral, point out that while the company had "bold targets" at its recent investor day, the near-term focus will be on raising money and keeping its spending under control.
"We are confident that fuboTV can do both, but it is uncertain how dilutive the capital raise will be and how rapidly their cash burn will improve," Pachter wrote in a note to clients. The analyst added the company has a "solid head start" in providing its subscribers with live sports, a "thriving and growing advertising business" and offers a "compelling opportunity" for a sports gambling company to partner with.
New York City-based fuboTV (FUBO) shares rose 1% to $3.96 in premarket trading.
At its investor day in August, fuboTV (FUBO) said it would generate positive free cash flow and an adjusted EBITDA margin of 15% by 2025, while achieving 2M subscribers and a higher advertising average revenue per user of $15 to $20 by 2025, along with $80 or more per user in subscription revenue.
The company also said it would cut costs to be in the low-to-mid $10-millions range as it looks at contracts that are not profitable.
While Pachter listed a number of positives for fuboTV (FUBO), the analyst added that slowing subscriber growth, more competition, inflation and the continued rise of content prices are seen as headwinds in the near-term. However, it's possible that the company's fourth-quarter may benefit from a strong upfront cycle and the World Cup, which is being played in Qatar in November and December.
"We expect continued volatility in shares of FUBO, with a general upward trend into the World Cup (November – December)," Pachter added.
Earlier this month, fuboTV (FUBO) launched its Fubo Sportsbook in New Jersey after coming to an agreement with Caesars Entertainment.
Analysts are overwhelmingly cautious on fuboTV (FUBO). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a HOLD. Seeking Alpha's quant system, which consistently beats the market, also rates FUBO a HOLD.