Road Ahead Looks Good For Ferrari, Credit Suisse Says

Ferrari NV RACE is scheduled report release fourth-quarter results on Feb. 4. The quarterly results could indicate Ferrari’s “accelerating earnings power” as the company gears up for its big 2020 car lineup, according to Credit Suisse.

The Analyst

Credit Suisse’s Michael Binetti reiterated an Outperform rating on Ferrari with a price target of $205.

The Thesis

Ferrari is shifting to a strategy of “more frequent, higher-priced/higher margin cars” in 2020, Binetti said in the note.

He added that the company is likely to have shipped around 50 of its high-priced Monza model in the fourth quarter of 2019.

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Although management may provide conservative initial guidance for 2020, this could be the year when Ferrari achieves its “fastest revenue & gross profit dollar growth” in the five years between 2017 and 2022, the analyst said.

Binetti believes the company can support this growth given its strong car lineup, which includes four new higher volume range models. Ferrari would also benefit from Monza ramping up through the year.

While Ferrari may record some new costs and make bigger investments in 2020, there is upside to the current consensus estimates, as the company accelerates its car production and mix shift higher margin cars, the analyst said.

Price Action

Shares of Ferrari were trading higher by 0.95% to $172.87 at time of publication.

Photo by Jannis Lucas on Unsplash