Goldman Sachs upgrades Liberty Formula One, cites strong capital return potential

Goldman Sachs has upgraded Liberty Formula One Group (NASDAQ: FWONK) from a “hold” to a “buy” rating, citing a compelling investment case grounded in long-term growth trends and a clear path to robust capital returns.

Analyst Stephen Laszczyk set a new price target of $120 for the motorsport stock, reflecting a 17% upside from Monday’s closing price.

The upgrade comes as shares of Liberty Formula One have already gained nearly 13% year-to-date, signaling growing investor interest in the company’s unique positioning in the global sports media landscape.

In a research note published Monday, Laszczyk described Liberty Formula One as a “high quality, execution-based growth story with potential for outsized capital returns.”

The company owns both the Formula 1 and MotoGP racing leagues, which Laszczyk believes provide investors exposure to secular growth trends in sports media, while setting the stage for what could become a major capital return story within the broader media and entertainment sector.

Deleveraging and share repurchases to drive returns

A key component of Goldman Sachs' bullish outlook is the opportunity for Liberty Formula One to deleverage its balance sheet over the coming years and return a substantial amount of capital to shareholders.

Laszczyk noted that under the bank’s base-case scenario, Liberty could maintain leverage at 2.5x while executing a series of share repurchases.

This scenario implies a potential capital return of approximately $6.2 billion to shareholders by 2030, equivalent to about 25% of the company’s current market capitalization.

This strategic deleveraging, combined with disciplined capital allocation, supports a long-term investment thesis that is less reliant on short-term earnings surprises and more focused on structural transformation and shareholder value creation.

Goldman sees this approach as increasingly attractive within the media sector, where many companies face stagnating traditional revenue streams.

Revenue upside from sponsorship and MotoGP growth

Beyond financial engineering, Goldman also sees upside potential in Liberty’s core motorsport assets.

Specifically, Laszczyk argues that the market may be underestimating the monetization potential within Formula 1’s sponsorship category.

He believes that revenue from sponsorship deals could grow faster than analyst consensus expects, potentially outpacing current Street estimates through 2028.

The firm also highlighted growth opportunities in MotoGP, which Liberty Formula One recently brought under its umbrella.

While MotoGP is unlikely to serve as a near-term revenue catalyst, Laszczyk sees parallels with Formula 1’s growth trajectory following Liberty’s acquisition.

“Similar to how Liberty took 2+ years to start building momentum with partners for F1, we expect the MotoGP growth story to play out over the medium-to-long term,” he wrote.

Key to MotoGP’s expansion strategy will be globalizing the sport and potentially expanding its race calendar, which could unlock additional revenue through new markets and increased fan engagement.

Overall, Goldman Sachs sees Liberty Formula One as a differentiated media investment, combining strong fundamentals, growing global appeal, and a disciplined approach to shareholder returns.