Electrification And Hybrid Models Will Unlock Global Ultra Wealth Demand

Key Takeaways

• Expanded hybrid and electric offerings, along with new models, are driving fresh market share gains and attracting a broader base of affluent first-time buyers.
  
• Personalized luxury, innovative partnerships, and disciplined operations position Ferrari for strong margin expansion, sustained pricing power, and potentially outsized shareholder returns.
  
• Ferrari's reliance on combustion engines, elite buyers, and luxury branding faces challenges from electrification, competitive EVs, and shifting consumer trends, threatening growth and pricing power.

Catalysts

Through its subsidiaries, engages in design, engineering, production, and sale of luxury performance sports cars worldwide.

• While analyst consensus sees the electric Elettrica and the expanded hybrid line-up simply matching regulatory trends and premium demand, there is strong evidence that these new models could unlock not just compliance but accelerated market share gains among both existing Ferraristi and a rapidly expanding universe of ultra-high-net-worth buyers-potentially supporting outsized ASP increases and market expansion that far exceed even bullish expectations, with correspondingly higher revenue and gross margin uplift.
  
• Analysts broadly agree Ferrari's orderbook through 2027 signals exclusivity and pricing power, but they may be underestimating the compounding impact of newly launched models like Amalfi and 296 Speciale, which are both drawing unprecedented engagement from first-time clients in growth regions such as China and the Middle East; this "community expansion" effect could provide significant multi-year visibility on demand and further earnings resilience.
  
• Ferrari's deepening focus on ultra-high-margin personalization-already constituting approximately 20 percent of automotive revenues-combined with targeted model launches tailored to underpenetrated regions (such as the China-ready Amalfi) positions the brand to sharply accelerate revenue per unit and net margin expansion as the global appetite for unique, experiential luxury products intensifies.
  
• The upcoming Capital Markets Day is likely to introduce an ambitious multi-year product and marketing plan, leveraging new facilities (e-building, paint shop, testing track), brand collaborations (e.g., Hypersail), and innovation awards, which could structurally raise both top-line growth rates and long-term capital efficiency above consensus forecasts.
  
• Ferrari's vertically integrated R&D, disciplined cost environment, and innovative technology transfer across sectors (auto, racing, marine) are enabling operating leverage and cost controls that, when combined with strong cash flow, could support accelerated share repurchase or special dividends-potentially driving meaningful earnings per share growth beyond most analyst models.

Ferrari Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Ferrari compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Ferrari's revenue will grow by 10.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 22.9% today to 23.9% in 3 years time.
• The bullish analysts expect earnings to reach €2.2 billion (and earnings per share of €12.72) by about August 2028, up from €1.6 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 66.8x on those 2028 earnings, up from 44.8x today. This future PE is greater than the current PE for the US Auto industry at 45.0x.
• Analysts expect the number of shares outstanding to decline by 0.66% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 16.14%, as per the Simply Wall St company report.

Ferrari Future Earnings Per Share Growth

Risks

• Increasing global electrification and tightening emissions regulations present a major long-term risk for Ferrari, as the company's strong reliance on V8 and V12 internal combustion engines could undermine future product differentiation and weaken its premium pricing, putting pressure on both long-term revenue growth and net margins.
  
• Ferrari's transition to hybrid and fully electric vehicles introduces meaningful execution risk; delays, missteps, or underwhelming EV performance could damage brand prestige among enthusiasts, slowing model adoption and possibly reducing future earnings growth.
  
• The company's heavy dependence on ultra-wealthy buyers makes its revenues and operating margins especially vulnerable to macroeconomic shocks, changes in wealth distribution, regulatory crackdowns on conspicuous consumption, or the imposition of luxury taxes in key regions.
  
• Heightened competition from emerging luxury electric vehicle manufacturers, such as Rimac, Lotus, and high-end Tesla models, threatens Ferrari's long-term sales growth, pricing power, and ultimately its share of global luxury auto revenue.
  
• The rising trend of decreased car ownership, especially among younger generations in urban centers who favor shared mobility, may shrink Ferrari's addressable market over time and dampen future volume growth and top-line revenue expansion.

Valuation

• The assumed bullish price target for Ferrari is €546.0, which represents two standard deviations above the consensus price target of €439.69. This valuation is based on what can be assumed as the expectations of Ferrari's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €548.0, and the most bearish reporting a price target of just €380.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €9.3 billion, earnings will come to €2.2 billion, and it would be trading on a PE ratio of 66.8x, assuming you use a discount rate of 16.1%.
  
• Given the current share price of €400.4, the bullish analyst price target of €546.0 is 26.7% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.