Ferrari (NYSE:RACE) Wall Street Has This Aristocrat Wrong

Ferrari (NYSE:RACE) Wall Street Has This Aristocrat Wrong

$RACE,$MS

Ferrari (NYSE:RACE) could produce some all-electric cars, it will not renounce its commitment to internal combustion, because racing runs on gas. Racing has always been and continues to be everything to Ferrari

Traditionally, Terrari scoffed at EVs. But it is true that the iconic Italian automaker added hybrid-electric technology to its ultra expensive HyperSuperCar the LaFerrari.

But, up until his untimely death last year CEO Sergio Marchionne never hinted that Ferrari would go electric. It now seems likely that the Maranello Outfit will at least take a crack at a Prancing Horse with a motor, the timetable is uncertain.

The hybrid-electric piece makes sense, as Ferrari’s gasoline machines cannot survive in a world of rising emissions and fuel economy standards imposed by the world’s governments.

This has led to some wrong perceptions,Ferrari has been pitted against Tesla (NASDAQ”TSLA) even though the former sells less than 10,000 cars annually, while the latter delivered almost 250,000 in Y 2018.

Also, Tesla sells 2 sedans and an SUV, Ferrari sells no sedans and has only just begun working on what it calls a “FUV” or Ferrari Utility Vehicle.

Now, some analysts are fast forwarding to an all-electric Ferrari future.

The Big Q: Why?

The Big A: Under CEO Marchionne (dec.) and with a successful IPO in Y 2015, Ferrari became more of a global luxury brand than it was before. The entire auto industry is chattering away about EVs, and Ferrari has been sucked into that debate.

Morgan Stanley, in a research note published on Friday ahead of Ferrari’s Q-4 and full-year earnings, Morgan analyst Adam Jonas, who has a “hold” rating and $140 target price on the stock, wrote, “We think investors may be underestimating the up-front costs to transition to all-electric architectures.

Mr. Jonas is Bullish Ferrari, and RACE is + 13% YTD (111.24 at the close in NY Friday), and thinks that investors should buy if the stock slides following any kind of downgraded guidance for Y 2019.

Notably, Morgan’s Jonas is the most formidable Wall Street analyst when it comes to all things new in mobility and transportation.

Here is the problem

Unless Ferrari wants to create its own all-electric racing series, it cannot transform its lineup being battery-powered.

Wall Street makes this mistake about Ferrari. And Mr. Jonas should know better. Ferrari is the only publicly traded carmaker that always discusses its F1 results on Quarterly earnings call. And ever since Enzo Ferrari launched Scuderia Ferrari in Y 1947, Ferrari has been a racing brand 1st and a luxury consumer brand 2nd.

The company cannot this defining link and run a racing program that is disconnected from the cars it sells to the public.

And in many ways, the reason for 70+ yrs of road cars is that racing is expensive. And, the money to support the F1 team has to come from someplace.

Yes, electric cars can be race cars.

FE has been surprisingly successful. Hybrid-electric power-trains have also taken to the track. But serious all-electric racing is impossible. In FE, the rapid depletion of batteries was solved by switching cars. That is going away, but flat-out running is still disappointing because FE cars are much slower than F1 cars.

Ferrari FE Rendering

Ferrari does not have to go all-in with electrification. It can ride the internal-combustion engine until it is literally the last 1 standing.

And, if it has to charge people huger money to buy its cars, people will stand in line to buy them, as they always have.

The Bulls are now in charge as Ferrari has broken above its 50-Day MA at 107.50 fueling the rally so long as it holds support above Key support at 106.79 the Bulls are seeing 3 the Key technical indicators now Very Bullish and the trend is North.

Short interest is extremely low for RACE with fewer than 1% of shares on loan. This indicates that investors who seek to profit from falling equity prices are not currently targeting RACE.

HeffX-LTN’s overall technical analysis for RACE is Bullish.

Have a terrific weekend

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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