Citi analyst Jason Bazinet has downgraded Formula One (NASDAQ) shares to Neutral, from Buy (up from $61.00).

The analyst sees much of the upside being priced in at current levels while continuing to see F1 as “a compelling asset that will benefit from healthy top-line growth.”

“We believe the company has positioned itself to see improved monetization, driven by growing popularity of the sport, additional races each year and higher monetization per race,” Bazinet said in a client note.

The analyst predicts financial records that surpass those of pre-pandemic. These results have been priced in, and shares are trading at an unprecedented high.

“We attribute this to: 1) expectations for record revenue, adj. EBITDA and FCF. 2) Strong visibility due to the contract nature of the business. 3) Investors shifting into defensive stocks in fear of recession. Investors would have to agree to an adj or FCF of 2023 due to record financial performance, the loss of tracker discounts and the removal thereof. To see upside over 15%, EBITDA must be higher than pre-pandemic levels. As such, at prevailing levels we believe the risk/reward looks fairly balanced.”

Premarket Monday saw Formula One share prices drop by more than 2%

By Senad Karaahmetovic