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Monday, July 26, 2021

Ferrari (NYSE:RACE) is Not Like Any Other Automaker


Société Générale analyst Stephen Reitman upgraded shares of iconic Italian Supercar maker Ferrari (NYSE:RACE) to Buy from Hold and increased his price target by almost 30% to 183/share.

Ferrari is not like other auto makers. It behaves more like a luxury-goods stock, trading for 35X estimated Y 2020 earnings, far better than the 9.7X multiple for the Russell 3000 Auto & Auto Parts Index.

Barron’s notes in an article this week that RACE is worth 12X more than TSLA.

Last Friday, Ferrari CEO Louis Camilleri confirmed that the luxury Super car maker will unveil 3 new models this year as part of its business plan targeting revenues of around $5.6-B by Y 2022.

CEO Camilleri declined to give any hints about the new models, 2 of which will be unveiled at an event at its Maranello HQ next month.

Ferrari is accelerating the pace of its model launches, which by the end of the business plan will include its FUV dubbed Purosangue or Thoroughbred, the Icona series, available only to Ferrari owners, as well as the versatile Grand Turismo segment.

“We will privilege revenue over volume,” CEO Camilleri said, citing the Ferrari SF90 Stradale new plug-in hybrid supercar launched in May as a good example of “opening up a new price segment within our range of cars.”

Ferrari earlier announced that Q-2 profits rose 14% driven by its Portofino and 812 Superfast models and despite a model mix that saw North American sales slip. The company posted a net profit in the 3 months up to the end of June of $204-M, up from $180-M in the same frame last year.

Total shipments were 2,671 vehicles, an increase of 8% over the prior year, which included accelerated deliveries to China to get ahead of an emissions regulatory change.

Ferrari deliveries will grow this year to around 10,000 units, meeting the cap on small car manufacturers that includes emissions breaks.

CEO Camilleri declined to project sales for future years, but said he is not particularly concerned about the cap.

Net revenues were up nearly 9% boosted by vehicle personalizations, while lower deliveries at the Fiat Chrysler-owned Maserati hit Ferrari engine sales. Ferrari also said it increased its investments in F1 in anticipation of regulatory and technical changes in the racing cars in Y 2021.

Ferrari confirmed its FY targets at the high end of the range, with revenues above 3.5-B euros and earnings before tax and interest of between 1.2 and 1.5-B euros. (1 EUR = 1.12 USD)

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 161.96, and support at 158.44, all Key indicators are flashing Bearish in here. Ferrari finished at 156.78, -2.70 Monday 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…

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