Ferrari (NYSE:RACE) The Aristocrat of the Automotive Sector Defies Convention


Ok, sure, buying an auto stock in a downturn seems counter-intuitive, but it works if you are buying Ferrari (NYSE:RACE). 

The stock is up big YTD and we see additional gains ahead for the Italian maker of iconic Supercars.

Goldie analyst George Galliers upgraded shares of the Italian car company to Buy from Neutral, the equivalent of Hold, with a new 182 price target, up 16% from recent marks.

Also, Société Générale analyst Stephen Reitman upgraded shares to Buy on 5 August stating Ferrari is not like any other automaker. SoGen’s price target is 183/share.

With US, European and Chinese new-car sales falling, investors can be forgiven if they do not see the logic for a Ferrari buy. But Ferrari is not just a car company, it is a luxury goods company and only rich people can buy its Super and Hypersuper cars.

We see Ferrari as defensive in here

Ferrari has wait lists for its products and is not seeing weakness in demand for its product or order backlog. The strong demand and backlog is unique you cannot just go into a dealership and buy 1.

It is good to be a luxury-car seller. Ferrari trades for about 34X estimated Y 2020 earnings. General Motors (NYSE:GM) trades for just 5.8X estimated earnings.

Ferrari is the Aristocrat of the automotive sector.

Enzo Ferrari’s iconic Italian Supercar manufacturer claimed the title according to the latest Brand Finance Global 500 2019 report launched at the World Economic Forum in Davos.

HeffX-LTN overall technical outlook for RACE is Neutral to Bullish, overhead resistance is at 164.46, and support at 154.50, all Key indicators are flashing Bearish in here. Ferrari finished at 155.90, -4.92 Wednesday in NY.

Ferrari will continue to create value in the long term. Ferrari is a quality 1st long term investment, and I see it at 200/share in that frame.

Stay tuned…