Berenberg initiates Ferrari stock with Buy rating, cites strong brand power

Berenberg initiated coverage on Ferrari (RACE) with a Buy rating and EUR484 price target, emphasizing the luxury automaker's strong brand, pricing power, and exceptional financial strength, evidenced by a Piotroski Score of 9 and an 18-24 month order backlog, despite modest volume growth forecasts. This positive sentiment, echoed by Deutsche Bank's upgrade to Buy (EUR520 PT) based on new models and future margin potential, contrasts with CFRA's downgrade to Sell ($350 PT) due to concerns over slowing growth following Ferrari's Q2 2025 earnings and revenue miss, highlighting a divergence in analyst outlooks on the company's trajectory.

Analysis

Ferrari NV (RACE) presents a diverging investment narrative, marked by conflicting analyst ratings following its recent financial disclosures. On the bullish side, Berenberg initiated coverage with a 'Buy' rating and a EUR484.00 price target, citing the company's formidable brand equity and pricing power. This view is substantiated by exceptional financial metrics, including a perfect Piotroski Score of 9, a 48% return on equity, and a 51.2% gross profit margin. The firm highlights a robust 18- to 24-month order backlog and estimates that true demand is two to three times annual shipments, underpinning a strategy of managed scarcity. Deutsche Bank echoes this positive sentiment, upgrading the stock to 'Buy' with a EUR520.00 target, anticipating catalysts from the upcoming F80 supercar, potential for EBIT margins to exceed 30%, and a EUR3 billion share buyback plan. Conversely, the company's Q2 2025 results fell short of expectations, with EPS of $2.38 missing the $2.40 forecast and revenue of $1.79 billion below the projected $1.82 billion. This performance, characterized by a minimal 0.3% year-over-year shipment increase, prompted CFRA to downgrade the stock from 'Hold' to 'Sell' and slash its price target to $350.00, citing concerns over slowing growth. This creates a clear dichotomy for investors between Ferrari's proven long-term fundamental strengths and the more immediate headwinds of decelerating growth.

Key Decisions for Investors

• Investors should closely monitor near-term catalysts, including October's capital markets day and new model announcements, which could either validate the bullish thesis of margin expansion or exacerbate concerns about slowing growth.
• It is crucial to weigh the long-term fundamental strengths, such as a perfect Piotroski score and a multi-year order backlog, against the near-term concerns of slowing growth highlighted by the recent Q2 earnings miss and CFRA's downgrade.
• Long-term investors may consider any price weakness resulting from the recent earnings miss as a potential entry point, given the company's durable pricing power and strong brand loyalty, while short-term traders should be cautious of the negative momentum from slowing shipment growth.