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Why Ferrari Surged Over 10% following Its Q4 Results

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Nov. 20 2020, Updated 4:07 p.m. ET

Ferrari’s fourth quarter

On January 31, Italian luxury carmaker Ferrari (RACE) released its fourth-quarter and 2018 earnings results before the market opened. In the quarter, the company’s revenue stood at 845 million euros, up a marginal 0.6% compared to its revenue of 840 million euros in the fourth quarter of 2017. Analysts had been expecting Ferrari’s revenue to be much higher at 870.4 million euros.

However, Ferrari stock rallied by over 10% after its earnings announcement. Let’s find out what could be behind these gains.

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Key factors

While Ferrari’s revenue couldn’t beat analysts’ estimates, its profitability could. The company reported adjusted EPS of 1.00 euros, up ~40.8% YoY (year-over-year). With this, it managed to beat analysts’ consensus estimate of 0.85 euros by a wide margin, boosting investors’ confidence (IDLB) (PBDM) and driving its stock higher.

Last year, Ferrari shipped 9,251 vehicle units globally, a rise of 10.2% YoY. These shipment figures were also much higher than the company’s guidance of more than 9,000 units. A higher number of deliveries and a positive product mix improved the company’s profitability in 2018.

Solid 2019 outlook

In 2019, Ferrari expects its bottom line to grow by more than 3% YoY. It also expects a rise of nearly 6% in its adjusted EPS. RACE also expects its adjusted EBITDA to jump 10% YoY this year.

The company’s solid 2019 guidance added optimism and triggered a buying spree (IDHQ) in its stock.

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