Equity prospects

Ferrari

James Ayling, CFA, Research Analyst

Price€151.80

52 week high-low€169.05—€114.00

Net yield0.75%

Hist / pros per39.90—51.03

Equity market cap€27,720

Ferrari is an ultra-luxury car manufacturer with an iconic brand packed full of racing pedigree. Founded by Enzo Ferrari and headquartered in Italy’s Maranello, its competitive racing DNA permeates everything Ferrari does – including its stock market ticker RACE.

Ferrari generates significant revenue from producing cars and spare parts. It also receives sponsorship income from Formula 1 and generates other revenue from race engines and branded merchandise. Yet, what makes Ferrari unique is the control Ferrari retains over its operations. All production occurs in Maranello and limited supply, aided by invite-only customer lists, results in highly sought-after, ultra-luxury ‘driving experiences’. This tackles the biggest cost of car ownership (depreciation) as Ferraris offer impressive residual values. 

Ferrari’s valuation implies it is less a car manufacturer and more a luxury goods business. Looking ahead, investors expect a broader product range alongside higher volumes and higher average selling prices. That seems a tall ask - Ferrari needs to carefully drive ahead without diluting their premium image. Additionally, Ferraris don’t exactly embody environmental friendliness. Should we not ask the firm, which develops leading electrification technologies, to do more to clean up its tailpipes?

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