Ferrari investors are used to being pleasantly surprised by its financial results, but its latest earnings report wasn’t quite rock-solid enough and some investors rushed for the exits.
The Italian luxury sports car maker reported first-quarter earnings 13% higher than the same period last year, but sales were flat following a 20% fall in China. This allegedly prompted a 6-1/2% drop in the share price.
According to Bloomberg Intelligence analyst Mike Dean, quoted by Automotive News, the sharp fall in the stock price was because of disappointment from “those new to the stock”. The stock has since recovered about half of the drop to trade at around €388. Ferrari’s share price has been strong through 2024, rising from about €305 at the start of the year to near €406 at the end of March. It was quoted at €400 before the financial report was published.
Ferrari reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 13% to €605 million ($656 million) in line with analyst’s expectations. Ferrari’s EBITDA guidance for the year was unchanged.
Ferrari EBITDA last year rose to €2.28 billion ($2.45 billion) and it said three months ago it expects this to rise to €2.45 billion this year. Ferrari sees sales worth over €6.4 billion this year with adjusted EBITDA margins above 38%.
Bernstein Research, in a report that asked “Where’s the fire”, said Ferrari’s order book extends well into 2026. Some investors could have been disappointed by a lack of improved profit expectations by Ferrari.
“That was never on the cards in our view. In both 2022 and 2023, Ferrari waited until the second quarter before raising guidance and then doing it again in the third quarter. Why should 1Q24 be any different,” the report said.
Bernstein said because Ferrari’s order book is so strong it can easily switch deliveries between lower and higher price vehicles to keep the earnings trajectory under control.
HSBC Global Research, in a report on luxury autos Ferrari, Aston Martin and Porsche, said the Italians continue to lead for investors because of its earnings stability. Unlike most automakers Ferrari, because of its extended order book, doesn’t have to contend with profit volatility.
Analysts say stocks like Ferrari stand out as a key defensive play in an increasingly uncertain world and slowing demand in the broader luxury sector.
The report said Aston Martin and Porsche are in the middle of product renewals that offer “significant upside (profit) potential” but at the same time cause earnings volatility.
“Ferrari’s fiscal 2024 looks secure, but the scope for surprises is limited,” HSBC said.
One possible area for volatility is the China market, and again Ferrari looks the least exposed as reports circulate that the country may respond to any imposition of increased tariffs on its electric cars by the European Union with tariffs on luxury car imports with big ICE engines.
In a statement released Wednesday, HSBC Research said the luxury automakers import 100% of their vehicles into China.
“So theoretically they are the most exposed but they also have the highest pricing power to pass on the tariffs to the consumers. Amongst the luxury carmakers Porsche has the highest regional exposure to China at 21%, while Ferrari is the lowest at 9%, based on 1Q24 reported figures,” HSBC Research said.
In 2023 Ferrari increased global sales to 13,663, boosted by the introduction of the four-door Purosangue SUV.
According to HSBC Research, the model momentum in 2024 will be led by the Purosangue, expected to reach 18% of sales, the 296 GTS and Roma Spider. Daytona sales should increase, while the special series models SF90XX Stradale and SF90XX Spider deliveries will start along with the limited edition models the 499P Modificata and 296 Challenge.
Ferrari has set a 20% peak for sales of the Purosangue to make sure it doesn’t become overdependent on an SUV.
The 812 Superfast will be replaced by the new coupe, the 12Cilindri. The 6.5 liter V-12 gasoline engine in the coupe and convertible produces 818hp, the same as the 812 Competizione which is finishing production. Ferrari said Cilindri sales will start in Europe later this year and in the U.S. early in 2025. Prices start in Italy at €395,000 ($430,000).
The Aston Martin Vanquish, with its new 824 hp V-12, is a competitor.
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