After about one month from the IPO, rumors and critical views are rising on the run of Ferrari on the circuit of Wall Street. First doubts came over the stability of the price after 30 days of the initial offering, when analysts assigned first evaluation to Ferrari’s share.
So now, what troubles specialists is whether Ferrari is really a luxury company or just a car producer. Famous for its design and engine power, is it right to incorporate the brand within the luxury sector if we look just at margin and profit? Complexity of automotive building process is far from the one of jewelry and clothes.
Price suffered uncertainty and dropped by 18% from the highest value reached in October. Now it is under the placement price, which has been set at 52 dollars on October 21st.
Among the characters of this debate we can find:
UBS and Merrill Lynch, which are bullish and suggest “BUY”. They are expecting an increase in the value of the security determined by an expected increase in sales growth that will raise profits: Ferrari has always maintained the supply well below the demand of its cars, now it is time to fill this gap.
Morningstar’s analysts estimated a fair value of 50 dollars for the IPO and state that perspective of growth are interesting. Richard Hilgert, senior equity analyst of Morningtar, says: “Ferrari owns a strong vantage within its sector. Maranello’s brand is synonym of exclusivity, innovation and is one of the most recognized name worldwide. This permits the company to maintain high prices which, translated into accounting terms, mean a gross margin of 50% and EBITDA of 25%. All values in line with figures of other luxury companies”. Morningstar predictions are expecting an increase of 5,7% of revenues in the next following 5 years, based on the hypothesis that Ferrari aims to reach a production of 9000 cars within 2019.
JP Morgan does not predict any strong deviation of the price in the long term. Fair value will fluctuate until it reaches again its initial value of 52 dollars. Their suggestion is “HOLD” without using the share as an investment to neither exchange nor to sell. BNP remains in line with JP Morgan, probably in a more conservative way, setting the target price at 46 dollars and expecting profit lower than other luxury companies.
Lastly, Evercore is bearish and pessimistic: it has set a target price of just 40 dollars because of costs and profits considered inadequate to maintain the initial value of the IPO. Evercore says “SELL” .
The next IPO of Ferrari at Borsa Italiana in Milan could change predictions and values, but what matters now is that Ferrari appeared for the first time into the market with a price of 52 dollars, it reached in the same day a peak of 60,97 dollars, and now, on November 27th, it is 45.96 dollars on, quite the least value over its short presence in NYSE.
Even if Ferrari is currently a declining business, F1 will be a factor which helps the visibility of the company thanks to the “research and development that this year will reach the peak”, said Mediobanca.
Giorgia Bulgarelli
So now, what troubles specialists is whether Ferrari is really a luxury company or just a car producer. Famous for its design and engine power, is it right to incorporate the brand within the luxury sector if we look just at margin and profit? Complexity of automotive building process is far from the one of jewelry and clothes.
Price suffered uncertainty and dropped by 18% from the highest value reached in October. Now it is under the placement price, which has been set at 52 dollars on October 21st.
Among the characters of this debate we can find:
UBS and Merrill Lynch, which are bullish and suggest “BUY”. They are expecting an increase in the value of the security determined by an expected increase in sales growth that will raise profits: Ferrari has always maintained the supply well below the demand of its cars, now it is time to fill this gap.
Morningstar’s analysts estimated a fair value of 50 dollars for the IPO and state that perspective of growth are interesting. Richard Hilgert, senior equity analyst of Morningtar, says: “Ferrari owns a strong vantage within its sector. Maranello’s brand is synonym of exclusivity, innovation and is one of the most recognized name worldwide. This permits the company to maintain high prices which, translated into accounting terms, mean a gross margin of 50% and EBITDA of 25%. All values in line with figures of other luxury companies”. Morningstar predictions are expecting an increase of 5,7% of revenues in the next following 5 years, based on the hypothesis that Ferrari aims to reach a production of 9000 cars within 2019.
JP Morgan does not predict any strong deviation of the price in the long term. Fair value will fluctuate until it reaches again its initial value of 52 dollars. Their suggestion is “HOLD” without using the share as an investment to neither exchange nor to sell. BNP remains in line with JP Morgan, probably in a more conservative way, setting the target price at 46 dollars and expecting profit lower than other luxury companies.
Lastly, Evercore is bearish and pessimistic: it has set a target price of just 40 dollars because of costs and profits considered inadequate to maintain the initial value of the IPO. Evercore says “SELL” .
The next IPO of Ferrari at Borsa Italiana in Milan could change predictions and values, but what matters now is that Ferrari appeared for the first time into the market with a price of 52 dollars, it reached in the same day a peak of 60,97 dollars, and now, on November 27th, it is 45.96 dollars on, quite the least value over its short presence in NYSE.
Even if Ferrari is currently a declining business, F1 will be a factor which helps the visibility of the company thanks to the “research and development that this year will reach the peak”, said Mediobanca.
Giorgia Bulgarelli