Ferrari: Full braking as an opportunity

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  Christian Ingerl
  Redaktor

The Formula 1 team from Ferrari into their summer vacation. While Charles Leclerc took pole position in qualifying on Saturday in Hungary, the Monegasque was left behind in Sunday’s race due to a questionable strategy and “only” finished fourth. Nevertheless, Leclerc has once again provided a ray of hope for the Scuderia this weekend.

The sports car manufacturer’s operating business is also improving, albeit not at full speed. However, the general conditions are also relatively challenging at the moment. Despite the US tariff increases, the Italians managed to maintain sales at the previous year’s level of 3,494 cars, with turnover even increasing by 4% to EUR 1.79 billion. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose disproportionately by 6% to EUR 709 million. At the bottom line, the traditional group earned EUR 425 million, 3% more than in the previous year.

Forecast stands

The outlook for the future is also hopeful. Group CEO Benedetto Vigna referred to full order books and the resulting increase in confidence in the company’s forecast. The luxury car manufacturer is aiming for an increase in revenue of at least 5% to more than EUR 7 billion. EBITDA adjusted for special effects is also expected to increase by at least 5% to EUR 2.68 billion. Free cash flow from the industrial business is expected to exceed EUR 1.20 billion.

The tariffs imposed by the USA are no longer causing too much concern at Ferrari. While the Italians had recently warned that the operating margin could be 0.5 percentage points worse than originally announced, the company’s management removed this warning from its forecast following the tariff compromise between the EU and the USA. This is not only due to the lower than expected tariff rates, but production costs in the second half of the year are also likely to be lower than initially feared.

Sharp setback

The figures were good, as was the outlook – and yet the Ferrari share went into reverse gear after publication. However, the sharp correction of more than a tenth seems exaggerated. Analysts agree: The Canadian bank RBC suspects that some investors had expected a target increase and therefore pressed the sell button. According to expert Tom Narayan, however, the sports car manufacturer is still in a good position and, in his opinion, price weaknesses should be exploited. He puts the target price at EUR 475.

Bernstein Research is blowing the same horn and also sees an exaggeration of the market following the Ferrari figures. The analyst firm has left its rating for Ferrari at “Outperform” with a target price of USD 554. According to analyst Stephen Reitman, the sports car manufacturer’s head of investor relations did a good job at an investor event. She managed to straighten out the company’s negatively received statements on the second half of the year. The analyst consensus is also positive: the target price is EUR 452.50, which is 18% above the current level.

Investment solutions

In principle, Ferrari is one of the strongest brands in the automotive industry and has high pricing power. In addition, its profits are less cyclical than those of comparable companies in the sector. Although the share is currently consolidating on the chart, it has reached a support zone in the EUR 360/380 range. The bulls could now draw strength from this zone to initiate a rebound. Anyone who believes this scenario is plausible can invest in the Unlimited Turbo warrant (ISIN: DE000SU1Q041) from Societe Generale can turn an upward movement towards the 400 mark into disproportionately high profits. The leverage is 4.85 and the stop-loss level is EUR 314.02, which is just over a fifth of the current price level.

If, on the other hand, the Ferrari share were to move sideways, the Barrier Reverse Convertible RRAAFV from Bank Vontobel would be a suitable product. The recently issued security yields a return of 7.45% p.a. with a risk buffer of just under 28%.