Ferrari (NYSE:RACE) Beat the Street, Stock Spikes

Ferrari (NYSE:RACE) Beat the Street, Stock Spikes

Ferrari (NYSE:RACE) Beat the Street, Stock Spikes


Thursday, the iconic Italian luxury carmaker reported a 38% rise in Q-4 adjusted core earnings and gave a strong guidance for Y 2017, driving its NYSE listed shares us more than 4% on the day.

Ferrari was spun off from Fiat-Chrysler (NYSE:FCAU) in October 2015, said adjusted EBITDA in October-December Y 2016 rose to $271-M soundly beating the Street’s estimate.

Sales were up 12% above expectations helped by sales of its 12 cylinder models such as the GTC4Lusso and the newly launched and sold out LaFerrari Aperta.

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For Y 2017, Ferrari forecast an adjusted EBITDA of more than EUR 950-M, sales above EUR 3.3-B, and net debt falling to around EUR 500-M from EUR 653-M at the end of last year.

Analysts had forecast a Y 2017 adjusted EBITDA of EUR 921-M, and sales of EUR 3.29-B.

Stakeholders can assume that Ferrari has left some upside to their Y 2017 guidance and attempt to follow a similar pattern to Y 2016.

Regular readers of my Ferrari coverage will recall that I put a 60 price target on the shares in July 2016 when they were trading at 40, now I believe that 80 is not out of the question long term. We wait, we see.

Notably: As of Thursday’s close there is No technical resistance on the candle charts.

Further, that from Y 2019 all vehicles sold would have some hybrid elements, opening the way for shipments to grow substantially in future.

Currently, Ferrari is exempt from certain fuel economy and emissions requirements provided it sells fewer than 10,000 vehicles a year.

“It’s been a good year,” CEO Sergio Marchionne told us analysts during the conference call. “We have been satisfied with the progress we have made” since spinning off the brand last January and going public.

Ferrari aims to make more cars this year and is forecasting Y 2017 shipments above 8,400 vehicles and revenues of EUR 3.3-B. Mr. Marchionne said the earnings guidance, which includes adjusted earnings before interest and tax of EUR 950-M, “reflects a level of prudence. We need to be careful not to expose the house to unrealistic targets.”

Ferrari aims to expand production to 10,000 units in the future. Mr. Marchionne resisted suggestions that the Supercar maker add an SUV to its lineup. Do not expect that to happen ever.

Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 64.61 2 February 2017 2.47 65.01 65.12 64.2 895,500
HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Very Bullish (0.51) Bullish (0.46) Bullish (0.46) Very Bullish (0.62)

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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