Apple's announcement this week that it will offer select live Major League Baseball games on its Apple TV+ service had many investors scratching their heads. Apple stock fell after that news and other announcements from the company's spring product launch event.
But Evercore ISI analyst Amit Daryanani thinks investors misunderstand the company's strategy with Apple TV+, which could get a big boost from live sports. In a note to clients late Wednesday, Daryanani said Apple TV+ is "a great addition" to its ecosystem of products and services. He rates Apple stock as outperform with a price target of 210.
Apple says it will broadcast two MLB games on Friday nights during the regular season on Apple TV+. The weekly doubleheader includes live pregame and postgame shows. Broadcasts will start after the regular season begins on April 7.
Apple made the announcement Tuesday during its "Peek Performance" event. However, Apple stock sank 1.2% to close at 157.44 on Tuesday.
The multiyear streaming deal between Apple and Major League Baseball is worth $85 million annually over seven years, according to Forbes.
Apple will pay a $55 million rights fee and $30 million worth of advertising. Apple gets exclusive rights to telecast about 50 games a season in the U.S. and to eight countries overseas via Apple TV+. Forbes said Apple has the right to exit the agreement after the first or second year.
Apple Stock Retreats
On the stock market today, Apple stock fell 2.4% to close at 154.73. It was another rough day for the stock market, which is in correction.
In addition to "Friday Night Baseball," Apple TV+ subscribers in the U.S. will be able to enjoy "MLB Big Inning," a live show featuring highlights and look-ins airing every weeknight during the regular season.
Plus, baseball fans in the U.S. and Canada will have access to a new 24/7 livestream with MLB game replays, news and analysis, highlights, classic games and more, as well as a full complement of on-demand programming, including highlights and MLB-themed original content.
Apple TV+ will now feature two main types of content: scripted programming and live sports.
From 'Ted Lasso' To MLB Games
"On the scripted content side, Apple is focused on quality over quantity," Daryanani said. Popular shows on the service include "Ted Lasso," "See" and "The Morning Show." The company has no intention of competing with Netflix and others on quantity, he says.
Live sports is an area where Apple can leverage its financial resources to secure a big audience. Daryanani believes investors are underestimating the live sports opportunity.
Daryanani and other analysts believe Apple is pursuing other sports broadcast rights, including the NFL Sunday Ticket.
Apple TV+ currently has an estimated 20 million to 25 million subscribers, he said. At a current price of $4.99 a month, the service likely has annual revenue of $1 billion to $1.5 billion.
MLB's "Friday Night Baseball" is "a great starting point for live sports on Apple TV+," Apple stock analyst Gene Munster of Loup Ventures said in a blog post. "I expect more deals to follow. My money is now on something around the NFL and, eventually, Formula One."
Apple Stock In Consolidation Pattern
Apple stock has been consolidating for the past 10 weeks with a buy point of 183.04, according to IBD MarketSmith charts. It has an IBD Composite Rating of 91 out of 99, according to IBD Stock Checkup.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
