What I know is that there are people for whom the economy is never bad, and that includes Ferrari (NYSE:RACE) owners and buyers.
The iconic Italian automaker posted better-than-expected earnings for Q-1 of Y 2020 and actually saw a 5% increase in new car sales. Revenue was down just 1% in the Q. Management saw few cancellations and expects just a 2% decliner in sales for this year, if any.
So, now we have Ferrari valued at more than General Motors, Ford and its former parent, Fiat-Chrysler.
It wild that a very small, boutique sports car company can have a higher valuation than a global manufacturing powerhouse like GM. But valuations are about a belief in the future and Ferrari is valued as a luxury brand, not a automaker.
Ferrari is a merchandising powerhouse with a brand that is stronger and more important than any of its Supercars.
The strength of Ferrari from its jackets, caps, watches and more cannot be understated. It is more a luxury brand than a car company. As for the Supercars, Ferrari is recession-proof making it a defensive* stock.
Notably, Ferrari resumed production full Friday after idling its production since mid-March on the back of the C-19 coronavirus attack on Northern Italians.
* A defensive stock is a stock that provides consistent dividends and stable earnings regardless of the state of the overall stock market. There is a constant demand for their products, so defensive stocks tend to be more stable during the various phases of the business cycle
Our overall technical outlook is Nutral to Bullish in here
Ferrari finished Thursday at 157.28, +1.58 in NY. The stock is a 158.49 Pre-market at this writing.
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 have called it at it at 200+/share long term, adjusting it to 200/share short term (after the virus) and siding with BAML to 230 long term for now.
Have a healthy weekend, Keep the Faith!