Last Update 31 Oct 25

Fair value Decreased 1.91%

Ferrari's analyst fair value estimate has been revised downward to $468.82 from $477.93, as analysts point to slightly moderated revenue growth and profit margin assumptions in recent research updates.

Analyst Commentary

Recent Street research on Ferrari has highlighted a mix of enthusiasm for the company's long-term prospects and some caution regarding near-term execution and valuation. The following summarizes prevailing views from recent analyst actions and commentary.

Bullish Takeaways

Bullish analysts continue to see upside to Ferrari's margins and revenue growth. Strong brand heritage and durable returns on capital remain key factors in the company's long-term investment appeal.
Multiple updates reference the company's capital markets day as a potential catalyst, with expectations for ambitious mid-term targets, including a potential increase in EBIT margins and significant share buybacks.
The ongoing rollout of new models and a value-driven approach to electric vehicles are viewed as drivers supporting both sentiment and growth forecasts.
Expectations of raised dividend payout ratios and robust free cash flow bolster the case for shareholder returns, reinforcing Ferrari's premium valuation relative to peers.

Bearish Takeaways

Bearish analysts have reduced price targets, reflecting slightly moderated near-term revenue growth and profit expectations.
There are concerns that consensus optimism about the five-year plan may have outpaced pragmatic execution. This has led to downward adjustments in estimates following the company's capital markets day.
Some skepticism remains about valuation, especially in light of the application of additional peer-based discounts and the need to demonstrate further differentiators beyond brand strength.
With investor expectations high, the emphasis is on Ferrari delivering on ambitious targets, particularly in new segments such as electric vehicles, to justify current multiples.

What's in the News

Ferrari plans to release a new digital token, allowing wealthiest customers to participate in an auction for a Ferrari 499P (Reuters).
The Board of Directors authorized a share buyback plan and announced a share repurchase program totaling up to €3.5 billion.
The company provided long-term earnings guidance, expecting net revenues of around €9.0 billion and EBIT margins of at least 30% by 2030. This outlook is driven by an enriched product mix and strong demand for sports cars and personalizations.
Dividends are set to increase, with a proposal to raise the payout ratio to 40% of adjusted net profit from 2025. This would amount to approximately €3.5 billion distributed from 2027 to 2031.
2025 earnings guidance was raised, with expected net revenues now projected to be at least €7.1 billion.

Valuation Changes

Fair Value Estimate has decreased modestly from $477.93 to $468.82, reflecting more conservative financial projections.
Discount Rate has edged down slightly from 15.56% to 15.56%, indicating minimal adjustment in perceived risk.
Revenue Growth Assumption has been reduced marginally from 6.70% to 6.61%, aligning with tempered sales growth expectations.
Net Profit Margin Forecast has dipped slightly from 23.50% to 23.40%, suggesting a slightly softer margin outlook.
Future P/E Ratio has decreased incrementally from 55.26x to 55.16x, in line with the updated growth and margin outlooks.

Expanded infrastructure and new models, including electrics, aim to boost revenue and margins through enhanced production flexibility and personalization.
ESG initiatives and brand visibility investments enhance long-term growth and profitability by aligning with consumer trends and fostering engagement.
A potential oversaturation from new model launches could dilute brand exclusivity, while supply and economic challenges threaten brand desirability, margins, and diverse growth.

Catalysts

About Ferrari

Through its subsidiaries, engages in design, engineering, production, and sale of luxury performance sports cars worldwide.What are the underlying business or industry changes driving this perspective?

Ferrari's expansion of infrastructure and product offerings, including the new e-building and paint shop for enhanced personalization, is expected to increase production flexibility, supporting revenue growth and improved net margins through operational efficiencies.
The launch of six new models in 2025, including the anticipation of the Ferrari full electric, is likely to drive revenue growth, capturing both existing and new customers while expanding Ferrari's electrification journey.
Continued focus on personalization, expected to remain around 20% of car and spare parts revenues, enhances the revenue stream due to the higher profit margins associated with bespoke options.
Investment in lifestyle activities and brand enhancement, alongside new racing sponsorships, is intended to foster brand visibility and engagement, contributing to revenue growth and maintaining high profitability margins.
Efforts toward carbon neutrality by 2030, including significant reductions in Scope 1 and 2 emissions through renewable energy use, are expected to support long-term earnings growth by aligning with increasing ESG initiatives and consumer preferences.

Ferrari Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Ferrari's revenue will grow by 8.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 22.8% today to 23.8% in 3 years time.
Analysts expect earnings to reach €2.0 billion (and earnings per share of €11.45) by about March 2028, up from €1.5 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 63.6x on those 2028 earnings, up from 48.7x today. This future PE is greater than the current PE for the US Auto industry at 18.2x.
Analysts expect the number of shares outstanding to decline by 0.6% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 15.78%, as per the Simply Wall St company report.

Ferrari Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The influx of 6 new model launches in 2025 might lead to market confusion and dilution of brand exclusivity, potentially impacting the pricing power and overall brand desirability, which can influence net margins.
Concerns regarding the sustainability in demand, specifically related to electric and hybrid car residual values, could lead to decreased customer confidence and pressure on future sales revenues.
The observed trend of 81% of sales being attributed to existing customers raises questions about customer base diversity, which could limit revenue growth if this trend continues.
The ongoing supply chain challenges might impact production efficiency and lead to increased costs, posing a risk to net margins and earnings.
Changes in global economic conditions and potential tariff implementations could necessitate strategic pricing adjustments or impact market allocation, thus affecting revenues and profit margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $507.278 for Ferrari based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $597.04, and the most bearish reporting a price target of just $397.31.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €8.4 billion, earnings will come to €2.0 billion, and it would be trading on a PE ratio of 63.6x, assuming you use a discount rate of 15.8%.
Given the current share price of $449.56, the analyst price target of $507.28 is 11.4% 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.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

RACE: Upcoming Capital Markets Day Will Set Ambitious Earnings And Buyback Goals