Tuesday, Ferrari (NYSE:RACE) released its FY 2020 result to the market. The the 1s responders was not positive, shares sold down to 194.24 intraday, or 3.5% to 200 on Tuesday. Citi even turned Bearish!
Overall the result was good, even though the factory was shuttered for 7 wks during the virus chaos. Statutory earnings beat analysts expectations by a 15%, coming in at 3.28/share, and company guidance is for Y 2020 is 4.11/share.
Below are the Street’s latest post-earnings estimates for this year, as follows:
he 1T6 analysts covering Ferrari now predicting revenues of $5.06-B in Y 2021. This reflect a 53% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 71% to 4.73.
In the lead-up to this number, the analysts had been modelling revenues of $4.19-B and EPS of 3.91 in Y 2021. The analysts have increased both earnings and revenue estimates.
And although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of 243.60. Looking at that 1 yr price target may suggest a diverse view on possible outcomes for the business.
The most optimistic Ferrari analysts price target are 365 and 375 from UBS and LTN respectively, and the most pessimistic values Ferrari at 142.18. This is a broad spread of estimates, suggesting that analysts are forecasting a wide range of potential outcomes for the business.
We are expecting Ferrari’s growth to accelerate, with the forecast 53% growth ranking favorably alongside historical growth of 4.4% per yr over the past 5 yrs.
By contrast, our data suggests that other companies in the sector are forecast to grow their revenue at 23% per yr. So, while the growth outlook is brighter than in the past, we along with UBS expect Ferrari to grow faster than the sector overall. We see Ferrari’s market mostly untapped, and with the coming Armani luxury product line the growth would be much more significant.
The most important thing we see in here is that the analysts have upgraded their EPS estimates and that pessimism towards Ferrari following the the FY 2020 results has reversed to optimism. And that the business is expected to grow faster than the broader industry. And that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 is closed Friday 202.68 within its 52 wk range of 127.73 – 233.66 in NY. It’s all time high in NY was marked at 233.66 intraday on 29 December.
All technical indicators have turned Neutral to Bullish. Ferrari’s stock is oversold in here, but the pattern indicates the confirmation of the break out at 196.01 on 3 November and has confirmed.
The Key support is at 198.83 and the Key resistance is at 210.91 at the close Friday in NY.
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 243.60.
The Maranello Outfit’s shares were raised to Buy from 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 has been just 1 instance of insider selling over the past yr that we have seen.
The stock is considered defensive in the sector.
Have a healthy weekend, Keep the Faith!