Investing.com -- UBS initiated coverage of Formula One Group (FWONK) with a Neutral rating, forecasting slower growth in the coming years.

The analysts set a price target of $85 on the stock, citing a shift toward more normalized growth after years of rapid expansion.

"While growth should remain solid, we expect a decelerating trend going forward given lower operating leverage on team payments, less upside to race promotion in the near term, and a more modest uplift from the next U.S. rights renewal," UBS wrote.

The bank projects Formula 1's revenue (revs) and operating income before depreciation and amortization (OIBDA) will grow at 8% and 12% compound annual growth rates (CAGR) from 2024 to 2026.

This represents a slowdown from the 16% and 20% growth rates recorded between 2022 and 2024.

UBS believes the company's current valuation—21x OIBDA—sits near the low end of its historical range, but that this is "justified amid more normalized growth."

UBS sees the renewal of the U.S. linear media rights for the 2026 season as a potential tailwind, estimating a 1.6x increase in the average annual value (AAV).

However, they believe the impact will be limited, as U.S. rights account for only about 3% of Formula 1's primary revenue.

"Viewership is up low-single-digits during the current deal versus the 70% increase during the prior deal," UBS noted, projecting a smaller lift to growth this time around.

Looking ahead, UBS expects additional opportunities from the Concorde Agreement and Formula 1's recent $4.5 billion acquisition of MotoGP.

While these initiatives may expand into underpenetrated markets, UBS cautions that they will take time to bear fruit.

"The U.S. is again the big opportunity with races averaging just 30-40K viewers,

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