“Ferrari is 1 of the strongest brands in the world and the strongest brand in the luxury automotive sector, it is the Aristocrat”— Paul Ebeling
Ferrari’s (NYSE:RACE) Prancing Horse brand enters the world of high fashion and fine dining.
The iconic Italian company renowned for its F1 racing team and Supercars is launching its fashion collection Sunday and reopening a restaurant in its hometown of Maranello 2 days later.
The clothing line comes from creative director and former Armani designer Rocco Iannone while Michelin-starred Italian chef Massimo Bottura is relaunching the restaurant where founder Enzo Ferrari once dined with friends and F1 stars. I dined there in Y 1968,
Nicola Boari, Ferrari’s chief brand diversification officer, told us the aim is to reach new clients “in terms of both age and culture” – beyond its racing fans and sports car clients who already covet its branded jackets, T-shirts and caps.
The customer base for Ferrari’s cars is limited by design to under 10,000 vehicles a year and the Supercar carmaker says it hoped its brand extension strategy will account for 10% of profits within this decade
Ferrari’s foray into haute cuisine too follows in the steps of luxury fashion groups, including France’s LVMH and Kering’s Gucci, which also turned to Bottura for its 1st restaurant in Florence and a 2nd in Beverly Hills California.
“Ferrari is one of the strongest brands in the world and definitely the strongest brand in the luxury industry,” said Massimo Pizzo of Brand Finance, a brand valuation consultancy. “It has the potential to succeed even in the luxury apparel industry,” he said.
Ferrari’s former CEO Louis Camilleri unveiled the brand extension strategy, which includes fashion, restaurants and other luxury experiences, in Y 2019 just before the VirusCasedemic chaos struck and delayed its plans.
The launch now comes days after the appointment of new Chief Executive Benedetto Vigna, 52 anni, a physicist who has spent 26 yrs at semiconductor maker STMicroelectronics and is expected to drive Ferrari into the era of electric cars.
Last year, 11.3% of Ferrari’s net revenue came from its sponsorship, commercial and brand category – which includes the F1 team and revenue generated by the brand through merchandising, licensing and royalties down from 14.3% in Y 2019.
Ferrari plans initially to sell its fashion line through its stores and online
Exor, the investment company of Italy’s Agnelli family, has also been moving into luxury.
It recently bought 24% of shoemaker Christian Louboutin and became the biggest investor in Chinese luxury group Shang Xia, which was co-founded by France’s Hermes.
The collection is expected to include ready-to-wear items made with high-end fabrics, rather than more relaxed streetwear looks, the sources said.
The creations will draw from premier Italian fashion house Armani and tailor Pal Zileri, with clean-cut, elegant lines and subtle, minimalist details.
Ferrari declined to give details of its collection ahead of the big reveal Sunday.
Ferrari is The Aristocrat of the automotive sector.
Our overall technical outlook is still Bullish, a Key indicators are Bullish long-term. Ferrari reported strong earnings for Q-3 on 3 November and did the same for Q-4 and F-Y 2020 as reported on 2 February.
Ferrari closed Thursday at 211.65 within its 52 wk range of 127.73 – 233.66 Tuesday in NY. It’s all time high in NY was marked at 233.66 intraday on 29 December.
Key technical indicators are Bullish to Very Bullish long term. The candlestick pattern indicates the confirmation of the break out at 196.01 on 3 November and confirmed.
The Key support is at 210.05 and the Key resistance is at 216.87. The 14 May DOJI candlestick augurs a move further North.
Note: At the beginning of Y 2020 I called RACE at 230 by year’s end, the stock was trading at 165.22 on 1 January 2020, on 29 December 2020 it marked 233.66 intraday, its all time high
The Maranello Outfit’s shares were raised to Buy from Hold at HSBC, and Buys at Morgan Stanley and Bank of America.
UBS is now calling the stock at 365. Citi downgraded the stock from Neutral to sell. I have not seen any other Street downgrades.
Ferrari will continue to create value in the long term as it becomes the world’s 1st Super Luxury brand.
Ferrari is a quality 1st long term luxury products investment, BAML raised its call to 270 long term.
I have raised my long term target to 375, a Strong Bull call, the strongest on the Street and am holding the mark during this recent profit taking, and seeing RACE as a buying opportunity.
Ferrari has an average rating of Buy and a consensus target price at 231.99.
The Maranello Outfit’s shares were raised downgraded from Buy to Hold at HSBC.
Ferrari will continue to create value in the long term. Ferrari is a quality 1st long term luxury products investment, and I am calling it 375 long term, the Top on the Street, and adjusting it to 250/share short term.
A number of large investors have recently bought shares of RACE, and there have been very few instances of insider selling over the past yr that we have seen. And Ferrari continues to buy back its stock in here.
The stock is considered defensive in the sector.
Have a healthy weekend, Keep the Faith!