Goldman Sachs Cuts Ferrari As It Increases Capex To Race Ahead

Ferrari NV RACE will need to make higher capital expenditure earlier than expected for its transition to future technologies, according to Goldman Sachs.

The Ferrari Analyst: George Galliers downgraded the rating for Ferrari from Buy to Sell, while reducing the price target from $227 to $207.

The Ferrari Thesis: The announcement of a BEV (battery electric vehicle) by 2025 and the new CEO having a technology background are likely to propel Ferrari’s transition to technologies of the future, Galliers said in the downgrade note.

He raised the company’s capital expenditure forecast for 2021-2030 by around 5.6% from 754 million euros per annum to 796 million euros.

“As for our broader autos coverage, Ferrari’s recent share price rise has largely been driven by positive earnings evolution and consensus revisions,” the analyst noted.

“With the company having deferred its 2022 EBIT target to 2023, and Visible Alpha Consensus Data already c.12% ahead of the now 2023 EBIT target, we see scope for positive earnings revisions as limited,” he added.

RACE Price Action: Shares of Ferrari have dropped 3.30% to $204.33 at the time of publication Monday.

(Photo by Jannis Lucas on Unsplash)