Analyst Raises Price Target For Ferrari As It Races Ahead Into 2020

Ferrari NV RACE reported solid third quarter results, while raising the guidance for 2019. The company tends to provide a “relatively conservative outlook,” which suggests upside to its near- and long-term targets, according to Bank of America.

The Analyst

BofA’s John Murphy maintained a Buy rating on Ferrari while raising the price target from $200 to $225.

See Also: Ferrari Shares Rev Higher On Q3 Earnings Beat, Guidance Raise

The Thesis

Ferrari reported its quarterly adjusted EBITDA and earnings at €311 million and 90 cents per share, beating the BofA estimates of €303 million and 86 cents per share, respectively, driven largely by stronger shipments and revenue, Murphy said in the note.

This was a good operating quarter and Ferrari’s execution was strong, considering the “well telegraphed mix headwinds,” the analyst wrote. He added that while Cars & Spare Parts as well as Sponsorship & Brand generated revenues higher than the BofA estimates, Engines was marginally short.

Management raised the 2019 guidance for net revenues from around €3.5 billion to ~€3.7 billion, for adjusted EBIT from €0.85 billion to €0.92 billion and adjusted EBITDA from between €1.2-€1.25 billion to €1.27 billion.

Ferrari has not provided any update to its 2020 and 2022 financial targets. There could be upside to these targets, given the raised 2019 outlook and the fact that the company “tends to provide a relatively conservative outlook,” Murphy wrote.

Price Action

Shares of Ferrari were up 5.43% at $170.13 at the time of publishing on Monday.