Ferrari (NYSE:RACE) traded flat Wednesday after gapping down about 7% after Monday’s close in NY.
The Maranello Outfit reported its Q-1 earnings late Monday, although the results were very good, Ferrari said that the profit-growth targets it expected to hit next yr will not be hit until Y 2023.
Ferrari’s Q-1 operating profit rose 21% on strong demand for its newest V-8 sports car, while higher-end models helped push its operating margin to a very strong 26.3%, 2.7% higher than a yr ago.
Ferrari also said that its order book is at a record level, and it now expects its FY 2021 results to come in at the high end of the upbeat guidance ranges it provided in February.
The Big Q: Why was the stock down?
The Big A: Because it will not hit an ambitious goal that it set in Y 2018 until Y 2023, a yr later than planned.
Ferrari told investors in Y 2018 that it expected its profit to roughly double by 2022, with expanded profit margins driven by a range of new models including the company’s 1st FUV. But it said Tuesday morning that, because of cost cuts related to COVID-19 is pushing those goals forward a yr, to 2023. Ferrari’s market cap is currently $54.1-B and has a P/E ratio of 54.50.
That said, all signs are that Ferrari’s aristocratic Supercar business is still on pace even if the larger profits are a bit behind schedule.
Looks like a buying opportunity to me.
The word on The Street suggests a Moderate Buy with analyst consensus rating Ferrari with a 231.97 average price target, implying an 11.1% Northside from current marks.
Ferrari is The Aristocrat of the automotive sector.
Our overall technical outlook is still Bullish, a Key indicators are Bullish long-term. Ferrari reported strong earnings for Q-3 on 3 November and did the same for Q-4 and F-Y 2020 as reported on 2 February.
Ferrari on Monday finished at 203.38 within its 52 wk range of 127.73 – 233.66 in NY. It’s all time high in NY was marked at 233.66 intraday on 29 December.
Key technical indicators are still Bullish. The candlestick pattern indicates the confirmation of the break out at 196.01 on 3 November and confirmed.
The Key support is strong at 200.49 and the Key resistance is at 209.53 at the close Wednesday in NY. The homing pigeon candlestick indicates that the selling is over.
Note: At the beginning of Y 2020 I called RACE at 230 by year’s end, the stock was trading at 165.22 on 1 January 2020, on 29 December 2020 it marked 233.66 intraday, its all time high
The Maranello Outfit’s shares were raised to Buy from Hold at HSBC, and Buys at Morgan Stanley and Bank of America.
UBS is now calling the stock at 365. Citi downgraded the stock from Neutral to sell. I have not seen any other Street downgrades.
Ferrari will continue to create value in the long term as it becomes the world’s 1st Super Luxury brand.
Ferrari is a quality 1st long term luxury products investment, BAML raised its call to 270 long term.
I have raised my long term target to 375, a Strong Bull call, the strongest on the Street and am holding the mark during this recent profit taking, and seeing RACE as a buying opportunity.
Ferrari has an average rating of Buy and a consensus target price at 236.92.
The Maranello Outfit’s shares were raised downgraded from Buy to 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 am calling it 375 long term, the Top on the Street, and adjusting it to 250/share short term.
A number of large investors have recently bought shares of RACE, and there have been very few instances of insider selling over the past yr that we have seen.
The stock is considered defensive in the sector.
Have a healthy day, Keep the Faith!