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Skip NavigationMarketsBusinessInvestingTechPolitics & PolicyVideoWatchlistInvesting ClubPROLivestreamMenuLiberty Media Formula One knows its audience, and Jefferies says that’s helping it build a sustainable business with growing margins. The bank initiated coverage on the motorsport and live entertainment company with a buy, and a price target of $115. That represents a 21% gain from Tuesday’s close. Analyst Anthony Berni in a Wednesday note wrote that Liberty Media is focused on “the top of the K,” referring to the K-shaped economy and indicating that the company is prioritizing those better-off. That is seen across different moves by the company. “FWONK’s US-exclusive Apple TV partnership highlights the growing value of F1. We see potential upside from Apple TV’s 20M+ U.S. subscribers, many of whom likely fit F1’s premium demographic, despite a smaller TAM than ESPN,” Berni said. “We also expect growth from FWONK’s expanding premium experiences (e.g., F1 Arcade, F1 Drive, premium hospitality, and destination race weekends), as consumers increasingly prioritize experiences over goods.” FWONK 1Y mountain Liberty Media 1-year. He added he expects the company’s 2025 acquisition of MotoGP, the premier grand prix motorcycle racing championship, will also lead to expanding margins. That’s because MotoGP will adopt F1 economics, which has multiple times the revenue from sponsorship and media rights than the motorcycle championship all while only having double the fan base. And Liberty Media’s asset-light growth strategy also makes the company appealing in the consumer space, Berni said. “FWONK’s capital requirements remain modest, with CAPEX expected to stay < 3% of revenue during FY24-FY28,” he wrote in the note. “This asset-light model supports strong FCF,” free cash flow, “generation.” Formula One shares have lagged this year, falling 3.6% year to date, while the S & P 500 is up 12% in that time.Read More