Liberty Media Liberty Formula One, the Communication Services sector company, was revisited by a Wall Street analyst today. Analyst Benjamin Swinburne from Morgan Stanley maintained a Buy rating on the stock and has a $110.00 price target.
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Benjamin Swinburne has given his Buy rating due to a combination of factors that highlight the potential growth and stability of Liberty Media Liberty Formula One. One of the primary reasons is the expectation of a 20% compound annual growth rate in free cash flow per share through 2028, supported by a highly contracted revenue and expense base. This growth outlook is further enhanced by the attractiveness of sports assets like Formula One, which are seen as having high free cash flow conversion and being relatively insulated from disruptions in the entertainment industry, particularly those stemming from advancements in generative AI.
Additionally, the recent media rights agreement with Apple, despite its initial surprises, is expected to have a minimal net impact on existing estimates. The deal, which replaces the expiring ESPN contract, offers a significant increase in average annual value, albeit with some adjustments for foregone revenues from direct-to-consumer sales. While there are risks associated with transitioning from ESPN to Apple, such as potential viewership challenges, the partnership with Apple is seen as a strategic move that could leverage Apple’s global consumer technology platform to enhance Formula One’s visibility and growth prospects.