Landing the NFL’s Sunday Ticket could help YouTube-parent Alphabet accelerate its subscription services, according to Citi. Analyst Ronald Josey reiterated his buy rating, and maintained his price target on the stock, after The National Football League said Thursday that its “Sunday Ticket” subscription package will go to YouTube TV starting next season. The partnership is worth roughly $2 billion a year, and will run for seven years, according to people familiar with the matter. “[We] believe the Sunday Ticket could accelerate adoption of more subscription services,” Josey added. “We acknowledge the partnership is likely to impact overall margins here shorter term, but we look for improved top-line growth and greater subscription revenue over time and we reiterate our Buy rating and $120 TP,” Josey wrote in a Thursday note. The price target implies shares could surge 36% from Thursday’s closing price. Shares of Google-parent Alphabet are down roughly 39% this year. The stock rose nearly 0.4% in Friday premarket trading. The Sunday Ticket package will be available to viewers as an add-on service on YouTube TV, or on YouTube Primetime Channels as a stand-alone a la carte option. In July, Google said YouTube TV has more than 5 million customers, which included trial subscriptions. The base plan costs $64.99 a month. To be sure, some analysts had a more skeptical take on the partnership, which they expect is too expensive to be “economically beneficial” — at least in the near-term. “By offering the Sunday Ticket as an a la carte offering (and not having to sign up for a TV bundle), YouTube is lowering the friction to becoming a subscriber, but by our math, the company would need to attract close to 4x the number of Sunday Ticket subscriber than DirecTV did to break even,” Deutsche Bank’s Benjamin Black wrote in a Thursday note. “As such, while the longer-term opportunity within streaming and CTV has been boosted, amidst a challenging economic backdrop and growing calls for more measured spending, we think some investors may interpret this announcement as a signal that broader cost cuts are not a near-term focus for the company,” Black added. —CNBC’s Michael Bloom and Lillian Rizzo contributed to this report.
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