Investors seeking high returns on capital should look no further than Liberty Formula One , according to Goldman Sachs. The bank upgraded shares of the motorsport stock to a buy rating from hold. Analyst Stephen Laszczyk’s price target of $120 represents a potential upside of 17% from the stock’s Monday closing price. Shares of Liberty Formula One have rallied 12% this year. FWONK YTD mountain FWONK YTD chart In the Monday note, Laszczyk said that the company has a lot going for it. “High quality, execution based growth story with potential for outsized capital returns,” he wrote. “We believe that Liberty Formula One, through its ownership of both Formula 1 and MotoGP racing leagues, offers investors a high quality way to gain exposure to the long-term secular growth trends in sports media as well as what we believe will become a strong capital returns story within media & entertainment.” One of Liberty’s big opportunities stems from the potential to deleverage its balance sheet over the next several years. “Our base case assumes that Liberty Formula One will maintain leverage at 2.5x by returning capital to shareholders via share repurchases,” Laszczyk continued. “Under this scenario, we estimate that Liberty Formula One could return $6.2B to shareholders by 2030E, or ~25% of current market capitalization.” Meanwhile, the analyst also sees upside to analyst consensus for Formula 1, writing that the Street seems to be underestimating the potential for increased monetization in the sponsorship category. This opportunity for Formula 1 to grow revenue faster than consensus expectations could last through 2028. Another catalyst comes from opportunity for growth at MotoGP, the foundation for Grand Prix motorcycle racing. Laszczyk believes that Liberty could similar meaningfully grow revenue in the medium-to-long term following a period of re-positioning and investment. “In our view, similar to how Liberty took 2+ years to start building momentum with partners for F1, we expect the MotoGP’s growth story to play out over the medium-to-long term rather than provide a near-term catalyst for segment growth,” he wrote. “MotoGP’s clearest path for execution against improving race monetization will be via the globalization and possible expansion of its race calendar.”
