On Thursday, Deutsche Bank (ETR:DBKGn) expressed a positive shift in perspective on Liberty Media (NASDAQ:FWONA) Corp-Liberty Formula One (NASDAQ:FWONA), upgrading the stock from Hold to Buy. The firm also raised the company's price target to $83.00, ascending from the previous target of $73.00.
The upgrade by Deutsche Bank reflects a recognition of Liberty Formula One's attractive valuation. The new price target is based on a 20x 2025 estimated enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) and a 4.2% unlevered free cash flow (UFCF) yield for 2025. These metrics are consistent with the valuation implied by the stock's current price using 2024 estimates.
Deutsche Bank's analysis suggests that the valuation is on the lower end of the historical 19-33x EV/EBITDA range, with the exception of 2020, which was impacted by the pandemic. The bank believes that Liberty Media's Formula One, which is seen as a tier 1 global sport with unique intellectual property, deserves a valuation in the low to mid 4% UFCF yield range.
The bank maintains a positive outlook on the company's multi-year growth prospects. They cite multiple levers that are expected to drive this growth, indicating a strong position for Liberty Media's Formula One in the market. Deutsche Bank anticipates that the company is unlikely to experience devaluation to a higher yield unless there is a deceleration to a mid-single-digit growth rate, which the bank does not foresee in the coming years.
InvestingPro Insights
In light of Deutsche Bank's upgrade of Liberty Media Corp-Liberty Formula One, a glance at real-time data from InvestingPro provides further context for investors considering the stock. With a market capitalization of $17.0 billion, the company is trading at a price-to-earnings (P/E) ratio of 46.08, which is adjusted to 51.07 when looking at the last twelve months as of Q1 2024. This high earnings multiple is indicative of investor confidence in future earnings growth, aligning with the positive sentiment expressed by Deutsche Bank.
InvestingPro Tips suggest that analysts have revised their earnings projections upwards for the upcoming period, signaling an optimistic outlook on the company's financial performance. Additionally, Liberty Media's stock is characterized by low price volatility, providing a potentially stable investment option. The company's liquid assets also exceed its short-term obligations, which may reassure investors of its financial resilience.
For those seeking comprehensive analysis, InvestingPro offers additional insights on Liberty Media Corp-Liberty Formula One. There are more tips available, including assessments of the company's debt levels, profitability, and historical returns. Investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and gain access to these valuable tips, which could further inform their investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.