Mixed Bag for Auto Stocks: Analysts' Recommendations in March

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Part 7
Mixed Bag for Auto Stocks: Analysts' Recommendations in March PART 7 OF 8

Ferrari: Why the Stock Rally Might Continue

Ferrari stock

Last year, Ferrari (RACE) outperformed mainstream automakers and the broader market on Wall Street. Unlike other automakers, Ferrari stock delivered an impressive return of over 21% last year. Similarly, the company’s stock has risen ~19.3% in 2017 as of March 16. Ferrari manufactures and sells super luxury cars worldwide. The US is its largest single market. Strong consumer sentiment along with improved economic outlook in the US could be two of the primary reasons for its impressive rally on Wall Street.

Ferrari: Why the Stock Rally Might Continue

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Note that Ferrari’s gross margins are the highest among all of the automakers (XLY) including General Motors (GM), Ford (F), and Fiat Chrysler (FCAU).

Analysts’ recommendations

According to the latest data compiled by Reuters, 56% of the nine analysts covering Ferrari gave the stock “buy” recommendations, 22% recommended a “hold,” and 22% recommended a “sell.”

On March 16, Ferrari’s consensus 12-month target price was $63.67—already lower than its market price of $69.34.

Note that Ferrari separated from Italian-American auto giant Fiat Chrysler (FCAU) earlier this year. In October 2015, it was listed on the NYSE with a much-anticipated IPO (initial public offering) that was oversubscribed.

Key factors

After Ferrari’s strong 2016 earnings results, most Wall Street analysts are positive on its stock. However, they might be maintaining conservative price targets because its stock already witnessed solid gains in the last few months. Recent gains open the possibility of a downward price correction in the stock going forward. Technically, it’s trading in overbought territory.

Read An Investor’s Guide: Is Ferrari Racing on a Rough Road? to learn more about Ferrari’s business.

Next, we’ll look at analysts’ recommendations for Harley-Davidson stock in March 2017.


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