On Tuesday, Liberty Formula One (NASDAQ:FWONK) received a reiterated Buy rating and an $88.00 price target from Rosenblatt. The firm's stance comes in the wake of Formula One's announcement that it has agreed to purchase Dorna, the exclusive commercial rights holder to the MotoGP World Championship. The acquisition, valued at €4.3 billion, aligns with Formula One's current enterprise value multiples.
The transaction is set at multiples of 24x trailing twelve months (TTM) EBITDA, 25x EBITDA less capital expenditures, and 8.9x TTM sales. These figures are in line with Liberty Formula One's current trading multiple of 25x projected 2023 adjusted EBITDA and 5.4x projected 2023 revenues.
The analyst from Rosenblatt noted that the price paid for Dorna is similar to Liberty Formula One's trading multiple. However, the details regarding the improvement plans following the merger were noted to be sparse during the announcement. The success of the deal is seen as dependent largely on trust in Liberty's management, given the limited information provided about the action plan.
Liberty Formula One has earned a level of trust from its successful management of Formula One, according to the analyst's comments. This trust appears to underpin the firm's confidence in Liberty's ability to manage the acquisition of Dorna successfully, despite the lack of a detailed public plan at this time.
The acquisition by Liberty Formula One represents a significant move in the world of motorsport, bringing together two major players in auto and motorcycle racing under one corporate umbrella. With the reiterated Buy rating and price target, Rosenblatt signals its belief in the company's potential for continued success.
InvestingPro Insights
In light of Liberty Formula One's recent acquisition of Dorna, a look at the latest financial metrics from InvestingPro provides additional context for investors. The company boasts a market capitalization of $15.2 billion and trades at a high earnings multiple, with a P/E ratio of 74.06 and an adjusted P/E ratio for the last twelve months as of Q4 2023 at 87.97. Despite this high valuation, Liberty Formula One has demonstrated strong revenue growth, with a 25.22% increase over the last twelve months and an impressive quarterly growth of 63.13% in Q1 2023. The company's gross profit margin stands at 30.48%, indicating a healthy profit from its revenues.
From an operational standpoint, InvestingPro Tips highlight that Liberty Formula One operates with a moderate level of debt and has liquid assets that exceed short-term obligations. Additionally, analysts predict the company will be profitable this year, and it has been profitable over the last twelve months. Investors might also note that the company does not pay a dividend, which could be a factor in its reinvestment strategy and growth plans.
For those seeking a deeper dive into Liberty Formula One's financials and future prospects, InvestingPro offers additional insights. There are more tips available, providing a comprehensive analysis of the company's performance and valuation. To access these insights and enhance your investment strategy, visit https://www.investing.com/pro/FWONK and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.