Ferrari Shares Skid But Investors Confident Control Was Never Lost

Forbes

8 hours ago

Italian luxury sports carmaker Ferrari usually rides out any financial storms while lesser mortals issue profit warnings and are forced to batten down the hatches to ward off trouble.
Last week, Ferrari's share price dived 12% after a suspicion that its golden record through thick and thin might have come to an end. But analysts expect normal service to resume soon, not least because Ferrari had reported improved second quarter profits and reaffirmed its belief 2025 will be stronger than ever.
Analysts believe the negative reaction was due to a misunderstanding of company expectations after the financial news announcement, coupled with a view by some that the stock price might have become too expensive compared with other luxury goods companies.
Bernstein Research believes the relentless Ferrari success legend has plenty of life in it.
'We believe the Ferrari story is very much intact and the sell-off was overblown. We reiterate our $554 price target and 'Outperform' rating,' Bernstein Research said in a report.
Nevertheless, the share price on Monday hadn't recovered much, closing at €376.2 ($435.18) in Europe.
Deliberately conservative
Ferrari has a reputation for being deliberately conservative with its forecasts while being confident the predictions will be easily achieved, and then some. But this time the understatement was a bit too much, according to Bernstein, and led investors to believe Ferrari was signaling a fall in demand.
Bernstein sought clarification and was told there was no intention of pointing to any decline in demand, and it was a restatement of Ferrari's core philosophy of favoring pricing and mix over demand. In other words, Ferrari still plans to produce enough cars to not quite meet demand.
Ferrari reported net profit in the second quarter rose to €425 million ($492 million) from €413 million ($478 million) in the same period last year. Revenues rose 4.4% to €1.79 billion ($2.1 billion). It delivered 3,494 sports cars and SUVs, up 10. Ferrari said it has strong confidence in and reiterated its guidance for 2025, which said revenues will top €7 billion ($8.1 billion) with adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of at least €2.68 billion ($3.1 billion) with a profit margin of at least 38.3%.
One analyst who didn't want to be named attributed the share price fall to slightly lower growth in sales which called into question Ferrari's ability to keep on growing profits and average selling prices, while Reuters reported poor U.S. economic data raised questions about luxury companies like Ferrari.
Waiting for the CMD
Investment researcher Jefferies said in a report its estimates for Ferrari remained largely unchanged, as investors began to speculate about the upcoming Capital Markets Day on October 9. CMDs set the long-term goals for companies and this one is likely to reveal more details about the electric vehicle program.
Reuters reported in June that Ferrari had delayed plans for a second battery-electric vehicle until at least 2028. Ferrari didn't confirm the report, and since then other reports have suggested there was no plan for a second EV. Meanwhile, Ferrari will unveil its first EV, the Elettrica, at the CMD, with the world premiere next Spring, and first deliveries in October 2026.
Investment bank UBS said the share price reaction was excessive and could present a compelling buying opportunity for investors in the runup to the CMD. UBS said amongst its key conclusions from Ferrari's second quarter was the strong order book extending into 2027, and positive buyer feedback on the new Amalfi, which would expand the customer base. UBS said it still rates Ferrari shares as a 'Buy'.
Amalfi Is Ferrari's starter model, replacing the Roma
The Amalfi is Ferrari's entry-level model and replaces the Roma. The Amalfi is more of a facelift than a completely new model. It is powered by a twin-turbo 3.9 liter V8 engine.
According to HSBC equity research, it will be priced at €240,000 ($278,000) up from the Roma's €200,000 ($231,000).
'This is the Ferrari gateway product, so if you want to get into the 'family' this is where you need to start. Plus, we are now living in a world of tariffs and the Roma was one of the models the group didn't raise U.S. prices on earlier this year,' HSBC Equity Research said in a research note.