JPMorgan Upgrades Ferrari (RACE) to Overweight, 'on Idiosyncratic Profit Drivers & Differentiated China Downside Protection'

JPMorgan analyst Ryan Brinkman upgraded Ferrari (NYSE: RACE) from Neutral to Overweight with a price target of $525.00 (from $385.00).

The analyst comments "We are upgrading shares of Ferrari (RACE) to Overweight from Neutral after investor meetings we hosted recently with CEO Benedetto Vigna and Manager of Investor Relations Aldo Benetti over the course of two weeks in Tokyo, Taipei, Hong Kong, Singapore, Kuala Lumpur, Sydney, and Melbourne served to highlight key investment positives, including idiosyncratic drivers of high visibility earnings growth likely to be increasingly valued by investors amidst growing macro, industry, and geopolitical uncertainty, and as we gained greater comfort around key debate areas (including electrification) and emerged confident Ferrari will prove impervious to the present slowdown in China increasingly weighing on other high-end automakers and the European luxury goods brands which comprise the company’s closest investment peers. Company founder Enzo Ferrari is famous for having stated, “Ferrari will always deliver one car less than the market demands.” This is a philosophy which has been taken to heart — and then some — by the company’s current management led by CEO Vigna, who has maintained a high degree of discipline with regard to unit volume growth in the context of enthusiastic demand for its strongly executed products while also engineering an underappreciated cultural evolution within the company that is rooted in empowering employees via a leaner, flatter, and more collaborative organizational structure to improve the speed at which it embraces innovation. The scarcity-driven disciplined growth strategy has resulted in record pricing (with some recently launched vehicles selling for +20% or even +30% more than predecessor models) and record backlog (with current wait times averaging ~24-30 months vs. the ~18 months we estimate more typical). This in turn provides excellent visibility into future earnings growth — differentiated even amongst luxury goods peers, for whom the outlook has become murkier — including because of the ability for Ferrari to reallocate shipments away from markets experiencing softer demand, such as China (where the order book has compressed recently to “only” 15 months and where margin happens to be lower), instead toward regions where demand is strong (essentially everywhere else in the world, where wait times are close to approaching the point at which they may even be too long), resulting in not only no negative impact on total company profits from softer demand in China (a dynamic which exists for few global companies) but indeed higher margin. Meanwhile, Ferrari’s upcoming battery electric vehicle was said to be a true Ferrari that delivers an “incredible” driving experience and we postulate the company could as soon as next week debut its latest Supercar (a rare event which has historically provided a material earnings benefit). We are establishing a December 2025 price target of $525, predicated upon a 27.5x target multiple applied to our 2026 EBITDA estimate of €3,085 mn and 2025-end capital structure vs. our earlier December 2024 price target of $385 which had considered 2025 earnings and 2024-end capital structure."

For an analyst ratings summary and ratings history on Ferrari click here. For more ratings news on Ferrari click here.

Shares of Ferrari closed at $453.27 yesterday.

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