Expecting Ferrari (NYSE:RACE) to Beat Revenue & Earnings Guidance

Expecting Ferrari (NYSE:RACE) to Beat Revenue & Earnings Guidance

Expecting Ferrari (NYSE:RACE) to Beat Revenue & Earnings Guidance


Shares of Supercar manufacturer, premier F1 racer and purveyor of luxury goods, Ferrari (NYSE:RACE) have been driving higher ever since late June of Y 2016. The stock is up about 100% since its June 2016 low of 38.71, and I believe it has more room to run.

Ferrari marked its 52 week high at 76.11 Wednesday. The low for the frame is 38.71 marked in June 2016, it P/E ratio is 33.62, its market cap is $14.76-B

Ferrari reports earnings Thursday, 4 May.

In a note circulated to clients on 2 May, UBS equity analyst Michael Binet reiterated his “Buy” rating on the stock and raised his price target from 74 to 85.

Mr. Binet said that he expects Ferrari to surpass its Y 2017 earnings guidance of $950-M and raise guidance to $1-B by mid year. While UBS’s estimates are even higher.

Mr. Binet said that even his own estimates may be conservative, Here’s Binet: Even after raising our 2017 EBITDA estimates on increased shipments and revenues, we think there is still upside to our and consensus EBITDA estimates (UBSe: €965-M). In fact, we see potential for RACE to achieve its IPO target of €1-B in EBITDA this year, that is 2 years ahead of the IPO target to reach €1B by Y 2019.

Looking past Y 2017, I believe that Ferrari will be able to beat this year’s impressive sales numbers with the addition of the Ferrari California re-launch and the continued success of higher production volume vehicles like the 488 GTB, with the addition of the yet to be announced 488 GTO

It appears solid that  future earnings will be boosted by adding of more Special Edition (SE) Supercars, which sport Super margins.

Notably, many of Ferrari’s SE vehicles are just a bit  different than pre-existing production cars build them on pre-existing platforms, “trick” them up and sell them for more.

UBS’ Benet says: “In our view, the mix of revenues from “super margin cars” (e.g. Aperta, 70th Anniversary, TDF12, Japan 50th anniversary, or cars with some sort of premium pricing vs RACE’s standard production road models) will increase to 15% of total company revenues from 13% in 2016. And we believe margins within the “super margin cars” category could be significantly higher in 2017 compared to margins in the super margin cars group in 2016. For example, the convertible LaFerrari Aperta largely leverages the original LaFerrari platform with minimal extra cost (“no roof”), but has an estimated average selling price of €1.8m compared to the original LaFerrari at €1.3m.”

I whole heartily agree and my price target, currently at 80/share (the Key chart resistance) moves to 100/share on a clear break of that mark.

Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 76.02 3 May 2017 0.46 75.36 76.11 75.33 803,100


HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Bullish (0.44) Bullish (0.39) Very Bullish (0.52) Bullish (0.42)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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