UBS has initiated coverage on Liberty Formula One with a Neutral rating and a target price of €85.00. The bank's analysis suggests that while the sport has seen significant monetization due to its global appeal, future growth is expected to slow. This is due to factors such as reduced operating leverage, limited short-term potential for race promotion, and a more tempered increase in rights renewal in the United States.
UBS projects that primary revenues and OIBDA will grow at compound annual growth rates of 8 percent and 12 percent, respectively, from 2024 to 2026. Liberty Formula One's current valuation is in line with its historical range, trading at 21 times OIBDA.
Despite a recent earnings miss, Rosenblatt Securities maintains a Buy rating, citing positive factors such as free cash flow conversion rate, strengthening sponsorship cycle, and increased promotion fees.
Liberty Formula One's market capitalization is €17.35 billion, reflecting its significant presence in the sports entertainment sector. The company has achieved a revenue growth of 43.43 percent over the past twelve months. However, the high P/E ratio of 62.02 raises concerns. The stock is trading near its 52-week high, supporting the view that the valuation may be justified.
Liberty Formula One faces challenges and opportunities in a changing market landscape, with sponsorship deals, race promotions, and media rights playing a crucial role. The company's performance will also be influenced by the broader economic environment and consumer behavior trends.
Overall, while UBS has a cautious outlook, Liberty Formula One's strong market presence and recent performance indicate potential for continued success.