Ferrari, A Bright Star In Europe’s Automotive Sector – Analysis from Quadcode Markets
Strong Q1 Results Propel Ferrari Stock to New Heights
Ferrari has had a great run financially in the recent Q1 results where the company beat Q1 Non-GAAP EPS estimates by €0.18, while bearing revenue estimates for the same period by €40M. The company managed to ship 3,567 cars, 9.7% higher versus Q1 2020, while reporting an adjusted EBITDA of €537 million, which was up by 27.0% versus prior year. Following the company’s earnings results Ferrari stock jumped higher in pre-market trading and opened with a gap higher the next day. On the below screenshot from Quadcode Markets trading platform the impact of the earnings call is clearly visible.
Ferrari Stock Surges and Explores Electrification: A Promising Outlook and Considerations for Investors
Ferrari stock is up 40.76 year-to-date and since the earnings call day, Ferrari stock has held its ground after the initial jump and even made new highs.
During the earnings call, the Ferrari group CEO, Mr. Benedetto Vigna was happy to announce that the company is exploring any powertrain option including electrification that will enhance the company’s sports cars driving thrills. “In 2026 Ferrari’s formula 1 cars will begin to use 100% sustainable fuel”, something that usually creates a precedent for road car iterations of the specific technology later on.
HSBC has recently highlighted the Ferrari N.V. as its top overall pick in the European automobile sector. HSBC cited the strong earnings results of the company and the potential from customization. Subsequently, the bank raised its full year revenue forecast for the company by 3-4% and raised its price target from $300 to $325. Personalization of the cars stood around 18% in proportion to revenues from cars and spare parts providing Ferrari with a generous stream of revenue.
Despite all the positives, Ferrari seems to be highly priced compared to competitors as price to earnings ratio(P/E) stands very close to 53 versus 12 for the sector median. Arguably Ferrari’s profitability is much higher than the median average sector as is its revenue growth. However, this increases the risk of mean reversion in case headwinds make things harder for the company.
Going forward, the company’s future relies heavily on the company’s ability to monetize the trend towards electric vehicles and navigate the choppy waters of the global economy. So far the company seems to be successful and well positioned in its niche market.
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