Morgan Stanley Raises Formula 1 Stock Target

Investing.com — Morgan Stanley analysts have increased their target for Formula 1 stock to $102 from $88 on Friday, attributing this adjustment to stronger-than-expected sponsorship growth and steady free cash flow per share.

Despite softer ticket sales for the second Las Vegas Grand Prix, Morgan Stanley (NYSE:MS) emphasizes the broader benefits of the event for Formula 1's business, stating: “A softer than expected year two Las Vegas Grand Prix should not distract from… the bigger benefit of this event.”

They assert that Formula 1's 2025 sponsorship pipeline remains robust, enhancing revenue prospects for the coming years.

> “We raise F1 forecast modestly on higher sponsorship growth in '25,” said Morgan Stanley, predicting a 1-2% increase in 2026 adjusted EBITDA and forecasting around $3.50 of free cash flow per share by 2026.

The analysts note that tickets are still available for the upcoming Las Vegas Grand Prix, scheduled for November 2024, indicating that Liberty Media anticipates a year-over-year decline in ticket sales, a common trend for major events in their second year.

However, the event has catalyzed growth in other revenue streams, with analysts pointing to “new sponsorship deals that support a big '25 growth year in this area.”

Furthermore, the firm remains focused on upcoming milestones that could impact Formula 1's financials, including its U.S. rights renewal and the finalization of the new Concorde Agreement, which will outline team payments and other essential agreements for the sport's future.

The updated target for Formula 1 stock reflects Morgan Stanley's optimism about these growth prospects, with a steady increase in sponsorship revenue expected to bolster the sport's value in the forthcoming years. However, the firm has maintained an Equal-Weight rating on the stock.