Home Ferrari Why Goldman Sachs Downgraded Ferrari (NYSE:RACE)

Why Goldman Sachs Downgraded Ferrari (NYSE:RACE)




Goldman Sachs analysts downgraded the stock from Neutral to Sell and cut the iconic Italian Supercar price target from 227 to 207. The stock closed Monday at 205.28.

Last wk, Ferrari hired a new CEO, Benedetto Vigna, a 25-yr veteran of STMicroelectronics who led the chipmaker’s sensors and micro-electromechanical systems business (MEMS), the company’s largest and most profitable division.

Goldman Sachs lowered its rating on the stock based on its evaluation of 4 Key areas.

First, the firm expects capital spending to rise as Ferrari speeds up its new technologies and the announced Y 2025 delivery of its 1st EV.

Second, the analysts see limited scope for higher earnings.

Third, they see no benefit to Ferrari from the overall recovery from the auto industry’s chip shortages.

Fourth, the analysts see a 2% downside to their price target compared with a sector average of more than 12% for other automakers in the firm’s coverage.

We disagree on 1, 2 & 4, and see #3 is irellevant.

Ferrari is The Aristocrat of the automotive sector.

Enzo Ferrari’s iconic Italian Supercar manufacturer claimed the title according to the latest Brand Finance Global 500 2019 report launched at the World Economic Forum in Davos

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 closed Monday at 205.28 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 Bullish to Very Bullish long term. The candlestick pattern indicates the confirmation of the break out at 196.01 on 3 November and confirmed.

The Key support is at 200.00 and the Key resistance is at 209.50. The 11 June Hammer candlestick augurs a move further North.

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 231.99.

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. And Ferrari continues to buy back its stock in here.

The stock is considered defensive in the sector.

Have a healthy day, Keep the Faith!

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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.