Ferrari stock forecast: What now for RACE?

The sports car brand has been on a roll, but what’s the latest Ferrari stock forecast?

Contents

Ferrari had a good three months to 30 September, with the luxury car maker beating expectations by a considerable amount. The company said that it had broken the €1bn barrier for single-quarter earnings although that does depend on how you quantify earnings. Regardless, the Cavallino Rampante has enjoyed the past few months. But what of the future? Can we make a Ferrari stock forecast? 

Ferrari quarterly update: some good news

When Ferrari announced its latest set of quarterly results on 2 November, it was good news for the Italian car manufacturer. The business reported revenues of €1.053bn ($1.24bn), up 18.6% over the same Q3 period in 2020.

While this was good news, revenues actually missed the Zacks Consensus Estimate by 1.27%, according to Nasdaq. Nevertheless, there was some significant year-on-year growth. This was at least partially driven by more people shelling out on the legendary carmaker’s vehicles. Company chief executive Benedetto Vigna said in a statement: “The exceptional client relationships, fundamental in achieving the double digit growth in this quarter and year to date, are reflected in the record order intake worldwide, particularly in China and USA.”

The company shipped 2,750 vehicles during the quarter, an increase of 437 or 18.9%, year-on-year. This growth may be explained by people feeling more settled and confident after the traumas of the past 18 months, making them more likely to splash the cash on a luxury car. Taking a closer look at these headline figures, the company said that while sales of its eight-cylinder cars were up 39.4%, sales of 12-cylinder cars were down by 35.1%, which Ferrari attributed to a lower volume of orders for the 812 Superfast car.

The company also explained which cars were doing well, stating: “The shipments of the quarter were driven by the range models, with the first deliveries of the SF90 Spider that began in the quarter, while the Portofino M entered the ramp-up phase. The Ferrari Monza SP1 and SP2 continued to be delivered in line with planning.”

Investors would have been encouraged by the company’s year-on-year success being spread across the world, though some regions still outperformed others. While Europe, the Middle East and Africa saw a modest 1.6% uptick, the Americas scored Ferrari a rise of 40.1% while sales in mainland China, Hong Kong and Taiwan more than doubled. The growth in this region was driven by new models such as the Ferrari Roma and the SF90 Stradale. Meanwhile, sales in the rest of the Asia Pacific region also went up, albeit by a more modest (but still impressive) 21.1%.

When it came to earnings, there were some very good results, depending on how you look at things. The company was keen to post its earnings before interest, tax, depreciation and amortisation (EBITDA), which came in at €371m, up more than 12% from the previous year’s €330m. However, even without this method of recording earnings, the company’s net profit stood at €207m, up 20.8% year on year from €171m. There was further good news, with diluted earnings per share (EPS) standing at €1.11, up from €0.92, and representing an increase of more than 20.6% year-on-year. This figure represented an earnings surprise of 22.43%, according to Zacks.

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Looking forward

It was in light of this news that Ferrari said it would revise its future forecast upwards. Reuters reported that the company now estimates full-year adjusted EBITDA earnings for 2021 to be around €1.52bn, higher than the previous guidance of between €1.45bn and €1.5bn. 

Chief Financial Officer Antonio Picca Piccon acknowledged in a conference call that there were still challenges to be faced. The Ferrari CFO said: “Our guidance still relies on the assumption that trading conditions remain unaffected by risk of the Covid-19 pandemic and continued scarcity of electronic components. However, the dynamics of current market demand, never so vibrant before, support our confidence for the year and well beyond.”

The markets react

Ferrari price chart
Ferrari stock price history - Credit: Currency.com

The markets responded somewhat positively to the latest set of results from Ferrari. The Ferrari share price opened at €209 on 2 November, before the quarterly update was issued. Once the results came through, interest in the shares was boosted and they closed at €213.10, a rise of just under 2% over the course of the day. There was still time for more growth and, when the markets reopened on 3 November, the price was €215, an overnight increase of just over 0.89%. The results will have helped to increase any RACE stock forecast.

This news needs to be placed within the context of how the Ferrari share price has behaved in recent times. When the markets opened on 3 November 2020, it stood at €157.70, which indicates that there has been an overall rise of just over 36% across the course of the past 12 months. 

Ferrari stock prediction

So, what does this mean for the overall Ferrari stock forecast? When the Financial Times asked 14 analysts to give their Ferrari share price forecast for the next 12 months, their predictions were rather pessimistic, despite recent market confidence. The median RACE stock forecast came in at €191.50, which would represent a drop of 10.1% from where the price stood at the close of trading on 2 November. Meanwhile, the most pessimistic price prediction stood at $125, which would see a fall of 41.3%. There was some room for positivity, though, as the highest Ferrari stock forecast came in at €248, up 16.4%.

It’s also worth noting the latest recommendations for what to do with Ferrari stock. The latest FT survey was taken on 28 October, before the latest set of quarterly results, with 16 experts polled. Their predictions were something of a mixed bag. Just one advised buying Ferrari stock, but four said the company would outperform expectations. The most popular suggestion was for people to hold onto their shares in Ferrari, with six analysts recommending that course of action. Meanwhile, two people said they thought RACE would underperform against expectations, and three recommended selling Ferrari. 

FAQs

Possibly. The market around Ferrari has been very bullish over the past 12 months, and we don’t know when that will change. While predictions are very often wrong, we should note that the consensus around this stock seems to be somewhat pessimistic. That said, you will need to do your own research, remember that prices can go down as well as up, and you should never invest more money than you can afford to lose. 

Maybe. It’s worth noticing that RACE has risen a lot over the last year, so we do have to wonder when and if this will stop. It may be soon, if the predictions are to be believed. Nevertheless, you will need to do your own research, remember that prices can go down as well as up, and you should never invest more money than you can afford to lose.

This is entirely a matter for you. Ferrari has certainly done well over the last 12 months, but  you will need to do your own research, remember that prices can fall as well as rise, and you should never invest more money than you can afford to lose.

Further reading

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