Stifel Nicolaus analyst Daniel Schwarz maintained a Hold rating on Ferrari (RACE – Research Report) today and set a price target of €335.00.
Daniel Schwarz has given his Hold rating due to a combination of factors concerning Ferrari’s current market position and future prospects. His analysis indicates that while Ferrari exhibits strong viability for upcoming quarters, unique pricing power, and profitability, these strengths appear to be already reflected in the stock’s high valuation. The crux of his concern lies in the difficulty of justifying Ferrari’s trading at a price-to-earnings ratio of 50 times, since even stretching a discounted cash flow model to its limits barely supports the existing stock price, let alone any potential upside. This suggests that the stock is fairly valued at its current level, with limited room for growth, according to his view.
Additionally, Schwarz points to the normalization of Ferrari’s order book and a decrease in orders from China, despite the brand’s strategic decision to limit exposure in that market. He notes that Ferrari’s management has been cautious in their statements, indicating a shift from an extremely strong order book to a normalization which could signal a slowdown in demand. The successful ramp-up and delivery of the Purosangue SUV, which represents a significant portion of Ferrari’s new segment volumes, is acknowledged; yet, Schwarz remains cautious, emphasizing that the long-term success of models like the Purosangue will be better assessed with the development of used car prices. His projections for 2024 remain unchanged and slightly above consensus, suggesting a watchful approach to Ferrari’s stock for the time being.
Schwarz covers the Consumer Cyclical sector, focusing on stocks such as Mercedes-Benz Group, Ferrari, and Bayerische Motoren Werke Aktiengesellschaft. According to TipRanks, Schwarz has an average return of -4.4% and a 40.43% success rate on recommended stocks.
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Ferrari (RACE) Company Description:
Italy-based Ferrari NV designs, manufactures and sells luxury performance sports cars. The company offers sports, GT, and special series cars; limited edition hypercars; Fuori series, one-off, and track cars; and Icona cars. It also provides non-registered racing cars; and spare parts and engines, as well as after sales, repair, maintenance, and restoration services for cars. It participates in car racing such as Formula One.
