The Why of Ferrari (NYSE:RACE), the New Aristocrat Stock

The Why of Ferrari (NYSE:RACE), the New Aristocrat Stock

The Why of Ferrari (NYSE:RACE), the New Aristocrat Stock


  • Ferrari Stock Is About to Get Red Hot Again

The recent 15% correction all has put shares of Ferrari (NYSE:RACE) in a good place to rebuild positions.

The Big Q: Why?

The Big A: The iconic Italian luxury Supercar maker is about to leave all the competition in its exhaust.

Now, after the above mentioned correction shares of Ferrari are back in a sweet spot, according to Jefferies analyst Philippe Houchois.

“The recent 15% correction creates an attractive level to rebuild positions in Ferrari ahead of the long awaited Investor Day, possible on 1 February 2018,” Mr. Houchois said in a note to his firm’s clients

 “We expect Ferrari to detail a path to 12% to 15% EPS growth and the continuation of exceptional IC returns despite reinvestment,” the analyst said. Ferrari is also expected to disclose the “meaningful benefits” from its patent box tax regime.

Jefferies raised its price target for Ferrari stock to 130, implying a 24% upside from Ferrari shares’ closing price Thursday, 7 December. In pre -market trading Friday, 8 December, Ferrari stock finished up 1.36% to 106.04.

Ferrari stock has gained 108% since its IPO in late October 2015. And part of the luxury Italian brand’s success comes as the stock market reaches continued highs and demand for pricey Supercars grows.

 “It happens to make cars, but it makes luxury goods for a select group of people who cherish belonging to an exclusive club for our users,” Ferrari CEO Sergio Marchionne said in an recent interview.

That dynamic allows Ferrari to charge high prices for its high-end luxury products. Both the cost of manufacturing a Ferrari and the value a driver finds in owning 1 justify the price.

What Ferrari does work, as it is the Top performing carmaker in the entire automotive sector

Earnings for Q-3 of Y 2017 grew 2.8% Y-Y and beat FactSet analysts’ forecast by 8.8% and cars, part sales and Ferrari branded merchandise for the year ending 31 December are expected to rise 13% over last year to $2.5-B.

Overall, I am Very Bullish long term.

Have a terrific weekend.

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