Ferrari’s (NYSE:RACE) Stock Headed Back to Highs and Higher

Ferrari’s (NYSE:RACE) Stock Headed Back to Highs and Higher

Ferrari’s (NYSE:RACE) Stock Headed Back to Highs and Higher


  • Ferrari(NYSE:RACE) is running North on automotive sector analyst upgrade.

Wednesday HSBC’s automotive sector analyst Giulio Pescatore upgraded Ferrari from Hold to Buy and raised his price target 156/share (EUR 133.)

The Big Q: Why?

After initiating coverage in December 2017, Pescatore said he was “hesitant to become more positive” on Ferrari due to high expectations and very little overhead resistance.

Ferrari CEO Louis C. Camilleri’s cautious comments on company targets during the 1 August Q-2 earnings call sent shares lower by 8%. My take on that call was that the sector analysts were cautious of Ferrari’s new manager, actually he is well suited for the wheel, since he had been part of former CEO Sergio Marchionne (dec.) strategic planning team all the long, both at the company and the F1 team, where he placed a colleague as the The Scuderia’s boss.

I told our followers that the pull back was provided a good entry point.

Mr. Pescatore said Ferrari’s pipeline remains strong with new range models and specials driving volume and price expansion. He also believes consensus underestimate the inherit profitability of special models, such as the Pista and the overall mid-term pricing potential.

“A new model will be presented, which we expected to be the 1st of a new class of GT cars. Ferrari’s FCF generation should also improve significantly as the investments being made in 2018/19 start to bear fruit,” Mr. Pescatore said in a note to clients.

He believes significant plans for returning capital to shareholders will likely be announced by the company.

“We expect 15% of the market cap to be distributed to shareholders in the form of dividends and buybacks during 2018-22, limiting the potential of an acquisition,” he said.

Ferrari shares were up 4.16 on the NYSE, trading around 134.20 at the close.

Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 134.2 29 August 2018 4.16 132.66 134.66 132.095 957,800
HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Neutral (-0.04) Neutral (0.11) Neutral (-0.02) Neutral (-0.22)

Stay tuned…

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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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