Ferrari Money

Aug 12, 2023

Ferrari Daytona SP3 at Goodwood Festival of Speed (Photo by Martyn Lucy/Getty Images)

It won’t be long until the signature V-12 screech saying, look at me, here I come in my Ferrari, is replaced by the modest whir of electric power. But analysts don’t seem to think that will be a problem for the storied maker of luxury sports cars for the super-rich.

Ferrari’s latest financial numbers show robust health, and forecasts point to continued profitability growth. And according to Bernstein Research, there is still much business to be won in huge markets like the U.S. and China.

Ferrari now says its first electric vehicle will be unveiled in the last quarter of 2025.

International bank HSBC said in a report that by 2025 Ferrari’s adjusted EBIT (earnings before interest and tax) will reach 29.1%, close to the top end of its 27-30% target range for 2026.

In this year’s 2nd quarter, earnings before interest tax, depreciation and amortization (EBITDA) rose 32% from the same period last year to €589 million ($641 million), despite selling 2% fewer cars. The forecast for the year’s EBITDA profit margin remained unchanged at 38% while the profit forecast was raised a bit to between €2.19 billion ($2.38 billion) and €2.22 billion from the previous forecast of €2.13 billion to €2.18 billion.

After the first quarter report, Ferrari had predicted a strong second quarter followed by a soft 2nd half of the year.

Since the latest financial announcement, Ferrari shares have slid from the peak of just over €300 at the end of June to close at €279 Friday. But the shares have seen a powerful rally from €190 last October.

Ferrari said the 2nd quarter’s powerful profit performance was boosted by sales of the Daytona SP3, the 812 Competizione and the SF90.

“Our order book remains stunningly high across all geographies and the full product range thanks to a robust order intake,” chief executive Benedetto Vigna told analysts in a post-results ‘phone call.

Ferrari 812 Superfast (Photo by Michael Dodge/Getty Images)

Bernstein Research analyst Daniel Roeska said Ferrari’s latest numbers demonstrate how it is focusing on value over volumes.

“We believe this sets Ferrari up for stronger-than-expected earnings in 2024,” Roeska said.

Ferrari will enter 2024 with a much stronger mix.

“Management has clearly stated that it does not intend to substantially exceed its current theoretical capacity limit of about 15,000 before 2026. This prompts us to reduce our volume forecast by 9% in FY24 to 13,700 units, slightly lower than FY23's forecast. However, robust mix will more than offset lower volume expectations,” Roeska said.

Sales of the 4x4, 4-seat 12-cylinder €400,000+ ($436,000) Purosangue began in the 2nd quarter. If you order a Purosangue, (thoroughbred in Italian) now, you’ll have to wait until 2026 for delivery.

The Purosangue provides a new direction for Ferrari and some call it an SUV. Still, it has little in common with mud-pluggers like the Range Rover or Toyota Land Cruiser, and it is likely to be the first Ferrari to be battery-electric, according to Third Bridge analyst Orwa Mohamad.

“The launch of the Purosangue allows Ferrari to compete with the likes of the (Bentley) Bentayga, (Aston Martin) DBX, and (Lamborghini) Urus in a busy high-end SUV market. It won’t be surprising if the Purosangue becomes the first model to be electrified because of its platform architecture. There’s loads of space underneath the SUV to fit batteries,” Mohamad said.

Mohamad said Ferrari isn’t yet in the EV fast lane.

“Ferrari has been slow to react to the EV trend and risks losing out to competitors like Porsche and Lamborghini,” he said.

Ferrari SF90 Stradale (Photo by Martyn Lucy/Getty Images)

A strong new conventional model rollout will please investors, according to Bernstein’s Roeska.

“Ferrari is expected to launch a V12 GT, to replace the 812 Superfast, sometime in (the second half of 2023). We also now see Ferrari selling up to 3,000 Purosangue models, on top of the tail-end of 812 Comp. production, start of production for the SF90 XX and the new V12 GT. Higher Daytona SP3 production could also be achieved as the new e-building increases existing hybrid production efficiency,” Roeska said.

Roeska raised his earnings per share estimate by 7.4% for 2024.

Roeska said Ferrari is fighting off competition by producing new model lines of GT/Sports hybrids to make the brand more accessible to a large customer base, generating more sales. And there are still untapped sales in the U.S. and China.

“The company's renewed awareness that there are more customer segments to address may well translate into growth in America and China. Compared to other sports car manufacturers, China and America look under-tapped and broadening the product range will help Ferrari build its share in these markets,” Roeska said.

Amongst all this positivity for Ferrari there is a dark cloud on the horizon in the shape of Aston Martin. The legendary British luxury sports car maker has survived a debt crisis. It now looks set to become a formidable competitor again, led by its big selling DCX SUV.