Liberty Formula One: F1: More than a Sport, Reiterate Top Pick in M&E

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Liberty Formula One: F1: More than a Sport, Reiterate Top Pick in M&E

IdeaMwould love to be involved with the sport).

After marketing several days in London, we were surprised how under-owned the

stock is and with most looking for non-AI risk / Sports / Live Events winners, we

believe this can be a fund flow beneficiary esp if we see further de-escalation in the

Middle East (while noting that the 2 races not held in April are likely to cause some

complexity/incomparably with 2Q results).

The 3 biggest areas of pushback to the stock are: 1) less margin expansion from

Team Payment leverage than hoped following the last Concord Agreement (‘26-30),

2) debates on areas of upside post the US & UK media rights deals, and 3)

uncertainty around capital allocation (with the near-term focus on de-levering). We

think the first two points are fully reflected in consensus & the multiple, while on

the latter, we think a little buyback would go a long way in helping investor

concerns around capital allocation and take advantage of the share price. We were

encouraged by mgnt commentary last quarter that they were 'evaluating avenues

for capital deployment.'

FWONK financials are underpinned by highly visible & contracted revenue streams

(media rights & race promotion fees) with clear upside drivers around partnerships/

sponsorships and increasingly licensing, while MotoGP offers an inexpensive call

option (where they are in the early innings of running the proven F1 playbook). We

see a rare trophy asset with a strong growth and best-in-class FCF conversion. This

is alongside attractive valuation with shares trading at ~22x our FY27 FCF/sh of ~

$4.27 (vs historical range of 25-30x), which using ~27x derives our PT of $120.

6 key takes:

1.