Liberty Media Corporation - Series C Liberty Formula One FWONK shares offer a rare opportunity for investors to reap the benefits of the quest for exclusive sports content across TV and online platforms, according to Morgan Stanley.
F1-adjusted EBITDA is expected to grow about 40 percent from 2017 to 2020 in Morgan Stanley's base case scenario.
Even higher media revenue, including a soon-to-be-launched OTT network, and a faster ramp in sponsorship revenues could lead to 55-percent growth in F1-adjusted EBITDA from 2017-2020 in Swinburne's bull case, he said.
Though the shares of Liberty Formula One are up over 20 percent since 2016, excluding its 34-percent interest in Live Nation Entertainment, Inc. LYV, Swinburne said the F1 stub is up less than 5 percent.
Citing more new TV contacts that it had projected, Morgan Stanley raised its average annual value increase in all but one market from 1.3 to 1.3-1.8 times. On a consolidated basis, the firm hiked its 2018 and 2019 Liberty Formula One Group EBITDA by 3-4 percent.
"We see consolidated margins expanding modestly (150-200 bp) from 2017 to 2020, but the structure of team payments (variable with pre-team EBITDA) limits the upside from incremental revenue," Swinburne said.
The Price Action
Over the past year, Liberty Formula One shares have added over 21 percent.
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