Investing.com -- Deutsche Bank initiated coverage on Ferrari (NYSE:RACE) with a Hold rating and a price target of €430 on Thursday, citing the company’s strong pricing power and backlog but noting concerns about valuation and the transition to an all-electric future.
The bank’s analysts describe Ferrari as "the epitome of the luxury (auto) sector," highlighting its ability to command premium prices unmatched by other automakers.
"Ferrari’s financials have always been in a league of their own but have grown even stronger," Deutsche Bank (ETR:DBKGn) wrote, noting that pricing remains the key driver for higher earnings.
The company’s strategy of leveraging brand value into higher average selling prices (ASP) and margins is said to have resulted in significant stock outperformance over the past two years. Ferrari’s adjusted EBIT margin reached 28.3% in 2024, 14 percentage points higher than Porsche’s.
The bank adds that Ferrari’s backlog provides exceptional visibility, with orders already covering production through 2026.
The 12Cilindri lineup has fueled demand, but Deutsche Bank "only expect low single-digit volume growth in ’25," keeping annual production below 14,000 units.
Despite Ferrari’s strong fundamentals, the firm describes 2025 as "a transition year," with the phase-out of the Daytona SP3 creating a temporary gap in its high-margin Icona and Supercar lineup until deliveries of the F80 begin in Q4 2025.
Looking ahead, Deutsche Bank sees "price & mix to remain Ferrari’s key drivers for higher earnings," supported by new models like the 12Cilindri and SF90 XX Special Series.
However, analysts caution that Ferrari faces a challenge as it moves toward electrification, stating, "We consider this especially for Ferrari a challenge, whether the company is able to keep its mojo into the all-electric era."
At around 50x projected 2025 earnings, Ferrari’s valuation is "trending near all-time highs." Deutsche Bank acknowledges Ferrari’s strengths but believes its premium valuation leaves little room for upside, justifying the Hold rating.