Evercore ISI has made a notable adjustment to its outlook on Ferrari (NYSE: NYSE:RACE), increasing the price target from $475.00 to $565.00 while maintaining an Outperform rating on the stock.
The firm's analyst cited the significant impact of the hypercar on Ferrari's long-term earnings potential as a key factor for the revision.
The analyst's commentary highlighted the market's recognition of Ferrari's conservative guidance for third-quarter shipments amid the transition to a new ERP system.
The firm believes that while the third-quarter and even the 2024 results might be seen as less consequential, there are several reasons to anticipate that 2024 earnings will surpass guidance.
The reasons include robust demand for the 12Cillindri, potential for personalization, anticipated price increases for the Purosangue, and expectations that Ferrari will not reduce its Formula 1 assumptions during the third-quarter call.
Evercore ISI has updated its financial model for Ferrari, taking a detailed look at the Special Cars business from 2023 through 2030. The recent launch of the hypercar, which occurred last week, is expected to generate significantly more revenue and EBITDA than previously modeled. The firm suggests that these figures will likely exceed what was previously anticipated by the consensus.
The note from Evercore ISI implies that the hypercar's launch has altered the outlook for Ferrari's financial performance positively. This update to the model reflects a more optimistic view of the company's revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) in the coming years.
In other recent news, Ferrari has been experiencing significant developments. JPMorgan (NYSE:JPM) has upgraded Ferrari's shares from Neutral to Overweight, citing the company's high visibility earnings growth and promising strategy around vehicle electrification. Ferrari's second quarter revenues in 2024 surged to €1.7 billion, a 16% increase year-over-year, and net profits reached €413 million.
Bernstein SocGen Group and Morgan Stanley (NYSE:MS) have also raised Ferrari's price target, acknowledging the company's strong earnings and unique market position. However, Ferrari's chairman, John Elkann, is under investigation for allegations of tax fraud, which has led to the seizure of assets worth approximately 75 million euros.
Furthermore, Ferrari announced the termination of its partnership with banking giant Santander (BME:SAN) by the end of 2024, indicating a significant change in the company's sponsorship landscape. Amidst these developments, Ferrari maintains a disciplined approach to supply and demand, leading to a significant backlog of orders and record pricing.
The company's future earnings growth is expected to be driven by this scarcity-driven model and the anticipated launch of its upcoming battery electric vehicle.
InvestingPro Insights
Ferrari's strong market position and financial performance are reflected in the latest data from InvestingPro. The company's revenue growth of 15.28% over the last twelve months aligns with the analyst's optimistic outlook on Ferrari's future earnings potential. This growth is further supported by a robust EBITDA growth of 20.24% in the same period, indicating improved operational efficiency.
InvestingPro Tips highlight Ferrari's strong market performance, noting that the stock is "Trading near 52-week high" and has shown a "High return over the last year." These tips corroborate Evercore ISI's bullish stance on the stock. Additionally, Ferrari's ability to maintain dividend payments for 9 consecutive years demonstrates financial stability, which could be attractive to long-term investors.
It's worth noting that Ferrari's P/E ratio of 57.63 suggests a premium valuation, which may be justified by the company's strong brand and growth prospects, including the impact of the new hypercar mentioned in the article. For investors seeking more comprehensive analysis, InvestingPro offers 16 additional tips for Ferrari, providing a deeper understanding of the company's financial health and market position.
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