UPDATE: Goldman Sachs Double Downgrades Ferrari NV (RACE:IM) (RACE) to Sell on 4 Reasons
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Goldman Sachs analyst George Galliers downgraded Ferrari NV (RACE:IM) (NYSE: RACE) from Buy to Sell with a price target of EUR170.00 (from EUR192.00).
The analyst comments "We downgrade Ferrari from Buy to Sell for four key reasons: (1) following the announcement of a BEV by 2025, and the appointment of a new CEO with a tech background, we expect Ferrari to accelerate its transition to technologies of the future. While we would view this development as a positive for Ferrari’s long-term future, we believe it may drive the need for incremental capex (we increase our capex forecasts for 2021-30 by c.5.6% on average to €796 mn pa from €754 mn). Uncertainty around future capex requirements also brings uncertainty around future earnings and cash flow; (2) as for our broader autos coverage, Ferrari’s recent share price rise has largely been driven by positive earnings evolution and consensus revisions. With the company having deferred its 2022 target to 2023, and Visible Alpha Consensus Data already c.12% above the now 2023 EBIT target, we see scope for positive earnings revisions as limited; (3) we expect the broader auto industry to benefit over the next 12-18 months from a sequential improvement in global production, as a result of easing of semi-conductor shortages, improving end markets, and the need to re-stock. Sector relative, we do not see Ferrari as a notable beneficiary of this development; and (4) while we see only 2% downside to our price targets (€170/US$207), this is less attractive than our sector average upside of >12% among the OEMs we cover."
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