By Sam Boughedda
Following reports Apple (NASDAQ:AAPL) is the front runner favored to win NFL Sunday Ticket rights, an Evercore ISI analyst released a note to clients maintaining an Outperform rating and a $185 price target on the stock.
"The deal makes sense as a lever for driving incremental engagement and new customers to the TV+ platform, but it is unlikely to be profitable on a standalone basis," said the analyst.
The analyst said DirectTV is reportedly losing around $500 million annually on the rights, and it is only paying about $1.5 billion per year compared to the $2.5 billion they believe Apple may end up paying.
"Apple will likely be able to significantly grow the service beyond the 2M subscribers that DirectTV currently has, but we still think there is no real plan for the service to be standalone profitable," added the analyst. "DirectTV currently charges ~$300/season for NFL Sunday Ticket and we think Apple would likely stick with that price point. This implies Apple would need to hit 8M subscribers, ~4x current levels, to break even on the $2.5B annual fee for the rights."
The move by Apple would add to its recent acquisition of sports streaming rights after it acquired the right to MLB's Friday Night Baseball earlier this year and MLS games in June.