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On Tuesday, Guggenheim analysts maintained a positive outlook on Liberty Formula One (NASDAQ:FWONK) shares, reiterating a Buy rating and a $102.00 price target. The firm’s analysts expressed confidence in the upcoming U.S. media rights renewal for Formula One, anticipating a significant increase in annual average value (AAV). With revenue of $3.62 billion and impressive growth of 12.35% over the last twelve months, FWONK has demonstrated strong market momentum, reflected in its 29.39% return over the past year. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, suggesting investors should carefully consider entry points.
Guggenheim’s model predicts that Formula One’s U.S. media rights will see an increase to approximately $135 million AAV, up from the current $85 million, marking about a 1.6 times step-up in AAV. This optimism is based on several key factors, including stable ratings trends that have shown significant improvement over several years, a robust U.S. sports rights marketplace, and the relative value proposition offered by Formula One. InvestingPro data shows FWONK maintains a healthy financial position with a current ratio of 2.67 and operates with moderate debt levels, positioning it well for future growth opportunities.
The likelihood of ESPN renewing its contract with Formula One appears slim, but Guggenheim’s analysis suggests that there is interest from major streaming platforms such as Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Apple (NASDAQ:AAPL). The firm cites prior press reports that indicate these companies are considering the acquisition of Formula One media rights.
In the view of Guggenheim analysts, Amazon and Netflix are particularly well-suited to become partners with Formula One. Both platforms have a substantial reach in the U.S., a growing portfolio of sports rights that Formula One would complement, and strong promotional capabilities that could facilitate a smooth transition from ESPN.
The potential partnership with these streaming giants could be a strategic move for Formula One as it seeks to expand its audience and leverage the promotional strength of these platforms. Guggenheim’s steadfast Buy rating and price target reflect the firm’s belief in the value and growth prospects of Liberty Formula One shares amid the evolving media rights landscape. Analyst consensus remains bullish, with targets ranging from $60 to $125 per share. For deeper insights into FWONK’s valuation and growth potential, InvestingPro subscribers can access comprehensive financial health scores and additional ProTips in the detailed Pro Research Report.
In other recent news, Liberty Formula One reported its fourth-quarter 2024 financial results, with revenue reaching $1,167 million and adjusted OIBDA at $200 million. These results fell short of Guggenheim Securities’ expectations, which had projected revenue of $1,346 million and adjusted OIBDA of $269 million. Despite the shortfall, Guggenheim raised its price target for Liberty Formula One’s stock to $94 from $86, maintaining a Buy rating. The firm cited upcoming U.S. media rights renewals and potential new European promoter agreements as positive growth drivers. Additionally, Liberty Media has appointed Derek Chang as its new President and CEO, effective February 1, 2025. Chang brings extensive experience from the global media, sports, and entertainment industries, having held leadership roles at companies like EverPass Media and the NBA. John Malone, Liberty Media’s Chairman, expressed confidence in Chang’s leadership. Chang’s appointment aligns with Liberty’s strategy to optimize its portfolio and support the growth of its operating assets.
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