Image source: Formula 1.

What happened

Shares of Liberty Media Group (NASDAQ:FWONA) were surging today after the conglomerate scored an upgrade from Citigroup following news last week that it would buy the Formula One racing series. As of 3:07 p.m. EDT, the stock was up 14.6%.

So what

Shares of the media giant had already been edging higher after news of its $8 billion acquisition of Formula One broke last week; the stock was up 11% in the four prior trading sessions. Today, Citi analyst Jason Bazinet called the acquisition "transformative, upgrading his rating from neutral to buy and lifting his price target from $22 to $32. A few years ago, Formula One's valuation was estimated at $12 billion, making the $8 billion enterprise value at which it tied the deal look like a bargain.

Liberty Media also got a buy rating from Pivotal Research, which initiated coverage of the stock today and gave a price target of $35.

Now what

With today's gains, the stock is now up 50% since early July as the company's diversified mix of stakes in businesses such as SiriusXM Radio, the Atlanta Braves, and Charter Communications has made it a winner in a tough market for media stocks. Formula One's viewership in the U.S. has been growing rapidly, and Liberty sees its digital assets as underdeveloped. Liberty's reach in the U.S. should help it unlock some of the potential of Formula One, and it also helps to extend the brand into virtual reality and video games.

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