Ferrari (NYSE:RACE) Not Tesla is a Money Making Supercar Maker
$RACE, $TSLA, $FCAU
Last week Tesla earnings (none) were one of the big stories in the auto industry. As usual, the EV maker made No money, but the “spun” news sent the market, analysts, and Tesla “lovers” into a frenzy, what hype.
But another company, Ferrari (NYSE:RACE), also attracted a positive reaction from the market and had the financials to back it up.
Ferrari posted net revenues of $898-M EBITDA of $265-M, and an adjusted net profit of $136-M in Q-1. The company delivered 2,003 cars, and sales of its V12 models increased 50%. The iconic Maranello outfit quietly made progress nearly 1.5 years into its public life as an independent automaker. For Y 2017, Ferrari expects to deliver 8,400 cars and rake in net revenue of $3.6-B.
Few analysts thought Ferrari would flounder when Fiat Chrysler Automobiles (NYSE:FCAU) spun it off in October 2015.
With a rich history dating to 1947, of expensive sports and racing cars, and its own loyal clienti that is many times larger than Tesla’s, the company was poised for success, though some skeptics wondered how it might get along after longtime chief Luca di Montezemolo stepped down before the NYSE and Milano listings.
The company remains within the FCAU auspice, as its Key stakeholders are connected to its former parent, and visionary Sergio Marchionne also drives FCAU.
Last week’s results showed Ferrari is gaining and thriving in the automotive world, Key analysts responded.
UBS analyst Michael Binetti reiterated Ferrari stock as buy status and raised his target price from 85 to 92.
Morgan Stanley’s Adam Jonas was more Bullish, raising projections to 100 in the next 12 months, he is in the same boat with my prediction.
Shares finished at 84 Wednesday on the NYSE.
Collectively we see Ferrari as different than a conventional automaker stock, with Mr. Binetti comparing it to luxury house Hermes, which produces high margins even for a specialty goods maker.
Mr. Jonas suggested Ferrari’s singular reputation and history, with 16 F1 Constructors titles, the most ever, could insulate its products even further when autonomous and EVs become more acceptable to the consumer.
A Ferrari is not transportation, I have been owning and driving them since the late 1960’s when it was and even more exclusive club, and being a member required more than money.
“In a world where pleasurable human driving experiences on an Open Road becomes increasingly scarce, the value of this club’s membership will appreciate.”
Yes, Ferrari is working on electric technology and has shown a willingness to diversify its product line with complex hybrid and turbocharging technologies.
Tesla (NASDAQ:TSLA) on the other hand posted revenues of $2.7-B in Q-1, booking a net loss of $330.3-M, $48-M more than in the same frame last year.
Its stock closed Wednesday at 325.22/share, amazing, as my work shows it with a real world valuation of 75-80/share best case.
|HeffX-LTN Analysis for RACE:||Overall||Short||Intermediate||Long|
|Bullish (0.44)||Bullish (0.27)||Very Bullish (0.60)||Bullish (0.46)|
|HeffX-LTN Analysis for TSLA:||Overall||Short||Intermediate||Long|
|Bullish (0.40)||Neutral (0.09)||Very Bullish (0.53)||Very Bullish (0.58)|