Formula One Buy Rating Cites $2B Buyback Potential and 21x 2027 FCF
Bank of America upgraded Formula One to Buy from Neutral, citing its durable model and 21x expected free cash flow valuation for 2027. It cut 2026 estimates by $191 million revenue and $80 million OIBDA from Saudi and Bahrain cancellations, but preserved 2027 forecasts and projects $2 billion in buybacks.
1. Upgrade and Valuation Profile
The firm raised Formula One to a Buy rating from Neutral, emphasizing the company’s resilient operating model and long-term growth outlook. Shares trade at 21 times projected free cash flow for 2027, presenting a favorable risk-reward compared with recent underperformance.
2. Short-Term Disruptions Impact
Cancellations of the Saudi Arabia and Bahrain events prompted a $191 million reduction in 2026 revenue estimates and an $80 million cut to OIBDA. Management views these disruptions as one-time impacts and maintained the 2027 financial forecasts.
3. MotoGP Acquisition Opportunity
Formula One’s purchase of MotoGP expands its portfolio, leveraging a global fan base nearly twice the size of MotoGP’s. The deal highlights additional revenue potential through higher monetization of media rights, race promotion and sponsorship.
4. Capital Returns Outlook
Starting in 2027, excess free cash flow could fund shareholder returns, with up to $2 billion earmarked for share repurchases. This initiative marks the beginning of a capital return strategy supported by the company’s durable cash generation.