Ferrari (BIT:RACE) is back in the spotlight after its Capital Markets Day triggered renewed debate among investors. The company’s updated long-term targets and reduced electric vehicle ambitions have sparked concern, especially as the stock has struggled lately.
Ferrari’s share price has lost significant ground this year, with a 1-year total shareholder return of -24.8% and a year-to-date price return of -20.6%. Momentum has faded following the company’s cautious long-term guidance, scaled-back electric vehicle ambitions, and challenges both in financial targets and on the Formula 1 track. While management is highlighting buybacks, higher dividends, and incremental growth goals, these moves have yet to reignite investor optimism in the stock after its sharp recent declines. That said, Ferrari’s remarkable total shareholder returns of 71.6% and 106.3% over the past 3 and 5 years respectively underscore its longer-term potential when sentiment improves.
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With shares down sharply but the company’s premium brand and robust margins still drawing investor fascination, the key question now is whether Ferrari shares offer genuine value at current levels or if markets have already factored in all future growth.
Ferrari’s most widely followed narrative sets a fair value comfortably above the current share price, suggesting ample room for upside if future projections hold. The narrative draws heavily on Ferrari’s brand strength, its evolving product mix, and new revenue streams, all set against a backdrop of robust global demand.
Expanding the model lineup (e.g., Amalfi, 296 Speciale, increased customization and personalization offerings) is successfully attracting new ultra-high-net-worth clients globally, especially in underpenetrated regions like China. This supports future revenue growth, improvements in average selling price, and long order backlog visibility.
Want to know what’s fueling this ambitious valuation? The narrative relies on bullish forecasts for earnings, margins, and a future valuation multiple that breaks records. What are the crucial numbers behind this luxury icon’s projected surge? The full narrative reveals the bold financial leaps analysts are betting on.
However, slower progress on electrification and potential shifts in luxury consumption trends could pose significant challenges for Ferrari’s ambitious long-term growth story.
While analyst forecasts and narratives flag Ferrari as potentially undervalued, its current price-to-earnings ratio is 36.3x. This figure is more than double the global auto industry average of 18.7x and far above its peer average of 14.3x. The fair ratio suggests 19.6x could be more reasonable. As a result, investors are paying a high premium compared to industry norms. Does this premium signal brand resilience or leave investors exposed if growth stumbles?
If you see things differently, or want to dig into the numbers on your own terms, you can shape your own Ferrari story in just a few minutes. Do it your way.
A great starting point for your Ferrari research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include RACE.bit.
