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On Friday, UBS analyst Ryan Gravett increased the price target on Liberty Formula One (NASDAQ:FWONK) shares to $93.00, up from the previous $85.00, while maintaining a Neutral rating on the stock. According to InvestingPro data, analyst targets for FWONK range from $80 to $125, with the stock currently trading at $84.83. The company has demonstrated strong momentum with a 29% return over the past year. The adjustment comes with expectations that the first-quarter results will underscore the defensive characteristics of Formula One’s revenue streams and an initial boost from new sponsorship deals.
Gravett anticipates that although there are challenging race comparisons from the previous year, the resilience of Formula One’s business model will be evident. This resilience is attributed to the predictable nature of its contracted growth and the defensive aspects of its revenue. InvestingPro data shows the company’s solid financial foundation, with a current ratio of 2.67 indicating strong liquidity and revenue growth of 13.4% in the last twelve months. The analyst expects a 10% increase in primary Formula One revenues for 2025, a rise from 8% in 2024. This projection is based on the assumption that the Las Vegas Grand Prix will normalize and sponsorship growth will accelerate.
UBS estimates that sponsorship revenues will see a significant uptick, forecasting a 23% increase compared to the 10% growth in the previous year. This is due to newly signed agreements aimed at upgrading existing partnerships and expanding the roster of sponsors. The high-end consumer market, including Paddock Club and Las Vegas Grand Prix ticket sales and hospitality, is seen to pose some risk, as it accounts for less than 5% of primary revenues and approximately 10-15% of total revenues.
For the fiscal year 2025, UBS projects that Formula One will achieve an Operating Income Before Depreciation and Amortization (OIBDA) of $909 million, which would represent a margin of 24.5%, an improvement from the 23.2% margin seen in the previous year. InvestingPro analysis reveals the company maintains a "GOOD" overall financial health score, with particularly strong growth and momentum metrics. For deeper insights into FWONK’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. This forecast is made considering the trends in team payments during the final year of the current Concorde Agreement.
In other recent news, Liberty Formula One reported its fourth-quarter 2024 financial results, revealing revenue of $1,167 million and adjusted OIBDA of $200 million. These figures did not meet Guggenheim’s expectations of $1,346 million in revenue and $269 million in adjusted OIBDA, primarily due to a weaker performance from the Las Vegas Grand Prix. Despite this, Guggenheim remains optimistic about Liberty Formula One’s future, maintaining a Buy rating and raising the stock’s price target to $94.00. The firm anticipates a favorable outcome from the upcoming U.S. media rights renewal and potential new European promoter renewals. Additionally, Guggenheim analysts have reiterated a Buy rating with a $102.00 price target, citing potential interest from major streaming platforms like Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) in acquiring Formula One media rights. Liberty Media has also announced Derek Chang as its new President and CEO, effective February 1, 2025. Chang, who has been on the board since March 2021, brings extensive experience from the global media, sports, and entertainment industries. His appointment is part of Liberty’s strategy to optimize its portfolio and support the growth of its operating assets.
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