Ferrari stock added to Morgan Stanley’s ’MAPS Global Equity’ list

Morgan Stanley has added Ferrari NV (RACE) to its MAPS Global Equity list, replacing Fomento Económico Mexicano SAB (FMX) due to its weakening fundamentals, citing Ferrari's exceptional brand strength, resilient demand, and robust growth profile. The luxury automaker's low price elasticity and affluent customer base have enabled consistent revenue growth, averaging 10% since 2016, and management recently upgraded its margin outlook despite global uncertainties, with order books largely sold out. Key catalysts include the launch of its first fully electric vehicle.

Analysis

Morgan Stanley has added Ferrari NV (RACE) to its MAPS Global Equity list, citing the luxury automaker's resilient business model and superior growth profile. The bank highlights Ferrari's low price elasticity and affluent customer base, which insulate it from broader macroeconomic volatility and have fueled an average revenue growth of approximately 10% since 2016, a stark contrast to the 2.5% average for mass-market peers like Ford and GM. This operational strength is further evidenced by management's recent upgrade to its margin outlook, where a 50 basis point headwind was removed, and by order books that are reportedly 'largely sold out.' From a valuation perspective, RACE trades at 39x consensus FY26 EPS, placing it in the middle of its three-year range of 30x to 50x. The move involved replacing Fomento Económico Mexicano (FMX), which was removed due to weakening fundamentals, specifically citing poor performance at its OXXO convenience stores and margin pressures from consumer trade-downs. Key future catalysts for Ferrari include its analyst day on October 9 and the launch of its first fully electric vehicle, though Morgan Stanley also notes risks such as EV transition costs and potential supply chain disruptions.

Key Decisions for Investors

• Investors could view Morgan Stanley's endorsement as a confirmation of Ferrari's premium valuation, supported by its defensive growth characteristics and strong demand, with the upcoming EV launch and analyst day serving as potential near-term catalysts.
• The removal of Fomento Económico Mexicano (FMX) due to margin compression and weakening fundamentals at its OXXO unit signals a bearish outlook, warranting a review of positions and heightened scrutiny of its upcoming performance reports.
• While Ferrari's outlook is strong, investors should monitor the stock's valuation at 39x forward earnings and remain aware of execution risks tied to its EV transition and any shifts in demand from its core high-net-worth consumer base.