Morgan Stanley Upgrades Ferrari Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: CNBC
- Rating Upgrade: Morgan Stanley upgraded Ferrari from equal-weight to overweight and raised its price target from $388 to $438, implying a 23% upside from Friday's close, reflecting confidence in Ferrari's growth prospects.
- Brand Risk Mitigation: Analyst Edouard Aubin noted that the market's de-rating of Ferrari's brand risk is overstated, with recent checks indicating that the brand remains intact, residuals are bottoming out, and future wealth creation and product pipeline support a re-rating.
- Stock Volatility: Despite Ferrari's stock falling 23% over the past year and a 5.6% drop following the debut of the new electric vehicle Luce, Morgan Stanley's analysis suggests that the market has overly pessimistic pricing regarding these issues, maintaining a strong long-term equity narrative for Ferrari.
- Market Consensus: Among the 13 analysts covering Ferrari, 11 have a buy or strong buy rating, indicating a widespread optimistic outlook on Wall Street regarding Ferrari's future performance, which further bolsters investor confidence.
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Analyst Views on RACE
Wall Street analysts forecast RACE stock price to rise
15 Analyst Rating
11 Buy
3 Hold
1 Sell
Moderate Buy
Current: 365.620
Low
349.74
Averages
448.83
High
555.00
Current: 365.620
Low
349.74
Averages
448.83
High
555.00
About RACE
Ferrari NV, known as Ferrari, is an Italy-based designer, manufacturer and retailer of sports cars that is incorporated in the Netherlands. It operates under the Ferrari brand. Its sports cars portfolio includes, among others, F12berlinetta, FF, Ferrari 488 GTB, 488 Spider, 458 Speciale, Ferrari California T, F12tdf and LaFerrari. The Company also offers financing services through Ferrari Financial Services. It also produces limited series and one-off cars. The Company divides its regional markets in EMEA (Europe, the Middle East, India and Africa), Americas, Greater China and Rest of APAC (Asia-Pacific region, excluding Greater China) and is active in over 60 markets worldwide through a network of authorized dealers.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Brand Risk Mitigation: Analyst Edouard Aubin noted that the market's de-rating of Ferrari's brand risk is overstated, with recent checks indicating that the brand remains intact, residuals are bottoming out, and future wealth creation and product pipeline support a re-rating.
- Stock Volatility: Despite Ferrari's stock falling 23% over the past year and a 5.6% drop following the debut of the new electric vehicle Luce, Morgan Stanley's analysis suggests that the market has overly pessimistic pricing regarding these issues, maintaining a strong long-term equity narrative for Ferrari.
- Market Consensus: Among the 13 analysts covering Ferrari, 11 have a buy or strong buy rating, indicating a widespread optimistic outlook on Wall Street regarding Ferrari's future performance, which further bolsters investor confidence.
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- Rating Upgrade: Morgan Stanley upgraded Ferrari from equal-weight to overweight and raised its price target from $388 to $438, implying a 23% upside from Friday's close, reflecting confidence in Ferrari's growth prospects.
- Brand Risk Mitigation: Analyst Edouard Aubin noted that the market's de-rating of Ferrari's brand risk is overstated, with recent checks indicating that the brand remains intact, residuals are bottoming out, and future wealth creation and product pipeline support a re-rating.
- Stock Volatility: Despite Ferrari's stock falling 23% over the past year and a 5.6% drop following the debut of the new electric vehicle Luce, Morgan Stanley's analysis suggests that the market has overly pessimistic pricing regarding these issues, maintaining a strong long-term equity narrative for Ferrari.
- Market Consensus: Among the 13 analysts covering Ferrari, 11 have a buy or strong buy rating, indicating a widespread optimistic outlook on Wall Street regarding Ferrari's future performance, which further bolsters investor confidence.
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- Real Estate Market Surge: Real estate agents in California's South Bay report a surge in interest from SpaceX employees looking for high-end homes, reminiscent of the 21% increase in home values following Facebook's IPO in 2012, indicating a potential boost in local property prices.
- Luxury Goods Consumption Trend: Newly wealthy individuals are likely to purchase luxury watches as their first indulgence, with brands like Rolex becoming popular choices, reflecting their desire for symbols of success and status.
- Increased Demand for Private Flights: As the IPO approaches, private jet companies are experiencing a surge in inquiries from SpaceX employees, many of whom plan to fly privately for the first time, with popular destinations including Las Vegas and Miami, showcasing the spending potential of these new affluent customers.
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- Ferrari's Low Valuation: Currently priced at $357.52, Ferrari's stock is trading significantly below historical valuations primarily due to uncertainty surrounding its first full-electric vehicle, Luce, although its unique brand and high margins make it resilient during economic downturns.
- Unique Sales Strategy: By limiting sales volume, Ferrari maintains brand exclusivity and pricing power, achieving a gross margin of 51.86%, which allows it to stand out in a highly competitive automotive market; despite the current low stock price, it continues to attract investor interest.
- Stellantis Turnaround Plan: On May 21, Stellantis launched a $70 billion five-year turnaround plan, aiming to introduce nine new vehicles priced under $40,000 by 2030 to address the affordability crisis in the automotive market, targeting a 35% increase in sales volume in North America.
- Market Share Recovery Goals: Stellantis expects to achieve adjusted operating income margins of 8% to 10% by 2030 and aims to increase production capacity utilization to 80% through the launch of new models, which will positively impact its future competitive position.
See More
Investment Opportunities in Ferrari and Stellantis
- Ferrari's Low Valuation: Ferrari (NYSE: RACE) is currently trading at a significantly lower P/E ratio than its historical averages, primarily due to uncertainty surrounding its first full-electric vehicle, which has made investors anxious about its future performance, despite the brand's strong uniqueness and pricing power in the luxury market.
- Stellantis Turnaround Plan: Stellantis (NYSE: STLA) launched a $70 billion five-year turnaround plan on May 21, focusing 70% of its investment on core brands like Jeep and Ram, aiming to regain market share by introducing nine new models priced under $40,000.
- Market Demand and Pricing Strategy: With the average price of new vehicles hovering around $50,000, Stellantis's low-priced models will address an underserved market segment, and it targets a 35% increase in sales volume and a 25% revenue growth in North America by 2030, significantly enhancing its competitive position.
- Investor Attention Opportunity: Despite recent declines in stock prices for both Ferrari and Stellantis, the unique brand value of Ferrari and the turnaround potential of Stellantis make both companies worthy of investor attention, especially in the current market environment, potentially offering a rare buying opportunity.
See More
