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Why Most Analysts Favor a ‘Buy’ on Ferrari in March 2018

Jitendra Parashar - Author
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Nov. 20 2020, Updated 11:52 a.m. ET

Ferrari stock

Ferrari (RACE) stock has outperformed legacy auto companies and the broader market for the last two years. In 2016, the company yielded positive returns of ~21.0%. In 2017, the Italian luxury carmaker saw its stock rise 80.3%. 

In comparison (XLY), Tesla (TSLA) stock rose ~45.7% in 2017. General Motors (GM) and Ford (F) rose 17.7% and 3.0%, respectively. On March 27, Ferrari stock rose ~14.2%, outperforming peers such as GM, Ford, and Tesla.

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Most analysts favor a “buy”

According to recent data by Thomson Reuters, 50.0% of analysts covering Ferrari stock gave it “buy” recommendations. Another 20.0% recommended a “hold,” and the remaining 30.0% expect Ferrari stock to drop and recommended a “sell.”

These analysts’ views were based on the consensus of ten Wall Street analysts covering Ferrari. These analysts’ 12-month consensus target price for Ferrari stock was $137.09, which reflected an upside potential of 14.5% from its market price of $119.70. In the last one-month period, the analysts’ consensus target price on the company has risen significantly from $132.21.

Key developments

In 4Q17, Ferrari reported an ~20.3% YoY (year-over-year) increase in its adjusted earnings. The company’s revenues for the fourth quarter remained nearly flat with a minor YoY rise of 0.5%.

On the brighter side, Ferrari’s adjusted EBITDA[1. earnings before interest, taxes, depreciation, and amortization] margin expanded to 30.7% in 4Q17 from 30% in 4Q16. During its 4Q17 earnings event, the company’s management guided to increase its global annual shipments to 9,000 units in 2018 from 8,398 units shipped in 2017.

Continue to the next part where we’ll look at analysts’ ratings for Harley-Davidson (HOG) stock in March 2018.

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