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Societe Generale Upshifts On Ferrari, Says Financial Revisions Are Favorable

Societe Generale Upshifts On Ferrari, Says Financial Revisions Are Favorable

Ferrari NV (NYSE: RACE)'s improved fundamentals, new management and revised financial objectives led Societe Generale to apply higher multiples to its existing forecast for the sports car manufacturer Wednesday. 

The Analyst

Analyst Stephen Reitman upgraded Ferrari from Sell to Hold and increased the price target from $94 to $130.

The Thesis

The upgrade is driven in part by new CEO Louis Camilleri and his concerns surrounding the preliminary reveal of the company’s midterm results, Reitman said in the upgrade note.

The company’s “Icona” strategy establishes a new range of expensive vehicles, the analyst said. 

“The entire series of 499 cars, with a price tag in Italy starting at €1.6 million, has already been allocated to Ferrari’s top clients/collectors. The significant upfront deposits, interim and final payments for this series will materially drive cash flow and EBITDA without the risk associated with significantly increasing series volumes.”

Ferrari evised its SUV strategy and plans to launch the Purosangue in 2022. This updated plan does not rely on Chinese growth in the sales mix, Reitman said.

“The new CEO and his team have changed the narrative in a way that we think significantly derisks the midterm plan.”

Price Action

Ferrari shares were down 7.5 percent at $119.41 at the time of publication Wednesday. 

Related Links:

Ferrari Races Higher After Upgrade

3 Reasons Why Ferrari Snagged An Upgrade From Morgan Stanley

Latest Ratings for RACE

Jan 2021CitigroupDowngradesBuyNeutral
Nov 2020B of A SecuritiesMaintainsBuy
Nov 2020Credit SuisseMaintainsOutperform

View More Analyst Ratings for RACE
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