Jefferies upgrades Ferrari stock rating to buy on growth outlook By Investing.com

Jefferies upgraded Ferrari to Buy and raised its price target to $400 from $348; the stock trades at $337.95 and is down 32.6% over the past six months. Jefferies cites high-single-digit growth and gradual margin expansion supporting a ~9% mid-term EPS CAGR; Ferrari reported 7% revenue growth over the last 12 months and a 51.7% gross profit margin. Bernstein raised its PT to $410 after strong Q4 2025 results and FY26 guidance targeting an EBIT margin ≥29.5%, while Evercore and JPMorgan remain constructive but note risks. Ferrari has temporarily suspended most shipments to the Middle East (4.6% of shipments) and accelerated some U.S. deliveries; continued conflict could negatively impact 2026 results.

Analysis

Ferrari’s optionality rests less on headline growth and more on structural scarcity and aftermarket dynamics: scarcity-priced “special” models create idiosyncratic FCF spikes (auction/consignment windows) that can outsize recurring margin improvements. That amplifies operating leverage — a 200–300bps sustained gross margin lift in core models translates to outsized EPS upside because R&D and fixed SG&A are largely fixed in the near term.

The current geopolitical rerouting is a classic two-edged supply-chain shock: shorter-term revenue recognition benefits where vehicles are accelerated into receptive markets, but prolonged disruption raises logistics costs, insurance premia and dealer concentration risk that compress margins if sustained beyond 2–3 quarters. Separately, nascent weakness in broad “range” resale values suggests demand normalization at the margin; if that trend continues over 6–12 months it will cap the luxury premium Ferrari can sustainably charge on follow-on options and customization.

Second-order beneficiaries include high-end bespoke suppliers and specialist auction platforms which capture incremental margin as scarcity drives aftermarket spreads; losers are volume-oriented premium OEMs whose fixed-cost base dilutes through lower retail pricing power. The trade hingepoints are near-term earnings cadence (next quarterly print) and the 6–18 month path of margin expansion vs. normalization in used-vehicle spreads — either will re-rate multiple and validate option-like upside or reveal cyclicality not yet fully priced.

Key Decisions for Investors

• Accumulate RACE on a >10% market pullback from current levels with a 6–18 month horizon; position-size to limit downside to 8–12% of portfolio NAV and target asymmetric upside of 30–50% if margin expansion and special-vehicle premiums continue (stop-loss at 12%).
• Defined-risk options: buy a calendar/vertical call spread on RACE (buy Jan-2027 1y ITM/OTM call spread sized to risk 1–2% NAV) to capture 12–18 month margin re-rating while capping premium; expected payoff 2–4x if consensus EPS path holds or improves.
• Pair trade: long RACE / short LVMH (MC.PA) equal notional for 6–12 months to play idiosyncratic auto scarcity vs. retail luxury cyclicality — long benefits from model scarcity and aftermarket, short protects against broad luxury demand pullback. Monitor China retail prints and travel-related demand (tourism flows) monthly.
• Event hedge: buy 3-month 5–10% OTM RACE puts (small size) to protect against escalation-driven shipping disruption or an unexpected resale-value shock around the next quarterly print; cost is insurance against a >15% downside event.