Ferrari (NYSE:RACE) Surprise, Targets Raised for 2020, Share Price Spikes

Ferrari (NYSE:RACE) Surprise, Targets Raised for 2020, Share Price Spikes


Ferrari (NYSE:RACE) expects growth in core earnings to accelerate to 10% this year and CEO Louis Camilleri said he may raise targets for Y 2020, betting on new models and Special Editions at premium prices for its loyal clienti, and admirers.

Thursday, after the earning’s call shares in the Italian luxury carmaker rose nearly 13.61% on very high volume after Mr. Camilleri said he was “Very Bullish”, adding that a forecast previously given for Y 2020 might be “on the low side” after he set some targets for this year even higher.

The spike in the share price accelerated the reversal of the fall since CEO Camilleri took over from Sergio Marchionne, whose sudden death in July shook shareholders who had expected him to remain until Y 2021.

Earlier this month Ferrari Chairman John Elkann reiterated his support for CEO Camilleri, denying speculation a top management purge could be on the cards after the replacement of Ferrari’s F1 principal.

What many on Wall Street have gotten wrong is that Louis Camilleri along with Mr. Marchionne is the architect of Ferrari’s aggressive 5 year planning programs to enhance the earnings and the company’s luxury brand.

In the call Thursday morning, CEO Camillieri said he is confident he can deliver the mid-term targets unveiled in September, despite trade tensions, a China slowdown, BREXIT, Italy’s recession and currency volatility.

“While we would never claim to be totally immune to what is going on in the world, we are remarkably resilient,” he told us on a post-results conference call.

“We continue to hold a strong order book and our order intake is firmly in line with our expectations.”

For Y 2019, Ferrari forecast adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rising around 10% to between EUR 1.2-1.25-B. Sales are seen growing more than 3% to more than EUR 3.5-B.

The iconic Italian Supercar maker known for its racing pedigree and distinctive sounding combustion engines will launch 5 new models this year in a bid to boost profitability, especially after shipments grew 10% last year.

“These models don’t only allow us to penetrate exciting new segments but also provide opportunity to leverage our pricing power,” he said, adding that the focus would be on boosting profitability rather than volumes.

In a strategy plan to Y 2022 unveiled in September, CEO Camilleri promised several Special Sditions, an FUV, and hybrid cars to almost 2X core earnings and boost margins to above 38% without sacrificing exclusivity.

Ferrari also plans a fully-electric model, but only after Y 2022, CEO Camilleri said Thursday.

He excluded any potential plans to combine with Fiat-Chrysler’s (NYSE:FCAU) luxury brand Maserati, saying it would be a “distraction” and Ferrari already had its plate full with the plans unveiled in September.

With margins at nearly 33%, strong pricing power and an enviable customer waiting list, CEO Camilleri inherited the wheel of a business he helped create that is firing on all cylinders.

Ferrari has posted years of record earnings, helped by Special Editions and a customization program. In 2018 adjusted EBITDA rose 8%.

One analyst asked about plans for its FUV called “Purosangue” (Thoroughbred) due in Y 2022, Camilleri said “nobody seems to be concerned that it would dilute the Ferrari image”.

Ferrari is the Aristocrat of of world’s automotive sector and the world’s strongest brand.

SymbolLast TradeDateChangeOpenHighLowVolume
RACE126.331 Jan 201913.61116.04127.07116.042,264,400

HeffX-LTN overall technical outlook for RACE is Bullish to Very Bullish in here there is very little resistance here and none above 140.26.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.