Morgan Stanley Lifts Ferrari’s PT To ‘Street High’

Morgan Stanley raised the price target on Ferrari stock to a ‘Street High’ of $265 (37.6% upside potential) from $180, amid expectations of stronger sales growth coming from EVs (electric vehicles) and SUVs (sport utility vehicles).

Morgan Stanley analyst Adam Jonas maintained a Buy rating on Ferrari (RACE), saying that “the company is entering a higher phase of growth and a tech transition that takes investor thinking beyond the limits of luxury goods comps.” Jonas believes that the luxury automaker is moving into EVs and SUVs and can corner the “super-luxury” EV and SUV market.

On August 3, Ferrari reported upbeat 2Q results. Its earnings of 0.04 euros per share beat the consensus estimate of 0.02 euros per share. However, it was much lower than the prior-year earnings of 0.96 euros per share. The company’s 2Q revenues of 571 million euros exceeded Street estimates of 554.6 million euros but were lower than the 983.6 million euros posted a year-ago. The company stated that the orders were “very strong.”

Ferrari lowered its full-year earnings guidance to 2.6 to 2.8 euros per share, from the previous guidance of 2.4 to 3.1 euros per share, due to disruptions tied to the COVID-19 pandemic.

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 7 Buys and 1 Hold. Following this year’s gain of 18%, the average price target of $212.82 implies upside potential of about 10.5% over the coming year. (See RACE stock analysis on TipRanks).

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