On Thursday, Wolfe Research adjusted its price target for shares of Liberty Formula One (NASDAQ: FWONK), increasing it to $86 from the previous $84. The firm has maintained its Outperform rating for the stock. The revision follows the company's fourth quarter earnings report, which revealed that revenue fell short of expectations, with actual figures at $1,230 million compared to the estimated $1,285 million and the consensus of $1,266 million.
This discrepancy was attributed to lower primary revenue of $838 million, which was below the estimated $1,085 million and consensus of $978 million. The shortfall was partially offset by higher than anticipated other revenue, which came in at $392 million against an expected $200 million and consensus of $283 million, due to the booking of more Vegas Grand Prix revenue under this category.
Despite the revenue miss, Formula One Group's Operating Income Before Depreciation and Amortization (OIBDA) matched Wolfe Research's forecast at $243 million, which was higher than the consensus estimate of $213 million. This was achieved through lower than expected team payments.
The full-year results for 2023 also showed a significant growth in sponsorship, which accelerated from 27% in 2022 to 33% in 2023, largely driven by the Las Vegas race. Additionally, media revenue increased by 11%, benefiting from contractual escalators and rights renewals.
The analyst from Wolfe Research cited the fourth quarter and full-year 2023 results as reinforcing confidence in Formula One's ability to capitalize on the profitability expansion from the Las Vegas event, alongside the consistent demand for live entertainment and growing sports rights. The firm's outlook remains positive, expecting continued financial growth for Liberty Formula One driven by these factors.
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