Last Update17 Oct 25Fair value Decreased 9.97%
Ferrari’s analyst fair value estimate was revised lower to $477.93 from $530.84, as analysts cited more cautious growth forecasts and updated peer comparisons for the reduced price targets.
Analyst Commentary
Recent analyst commentary reflects a dynamic outlook for Ferrari, with both bullish and bearish perspectives driving adjustments to price targets and recommendations. Analysts are closely monitoring the company's execution on its long-term plans, new model launches, and evolving industry dynamics.
Bullish Takeaways
- Bullish analysts point to Ferrari’s continued brand strength and resilient pricing power, seeing upside potential for margins and returns on capital, particularly as the company unveils new models and advances its electrification strategy.
- Several analysts highlighted Ferrari’s ambitious mid-term targets, including higher EBIT margins and substantial share buybacks, as evidence of management’s commitment to shareholder value.
- Recent price target increases were underpinned by confidence in the company meeting or exceeding 2026 financial estimates, as well as a favorable product mix driving revenue growth.
- The upcoming capital markets day and related strategic updates are anticipated to serve as catalysts for further share price appreciation, especially with expected announcements around EV initiatives and increased dividend pay-out ratios.
Bearish Takeaways
- Bearish analysts trimmed price targets due to more conservative growth forecasts and closer peer benchmarking, citing that some market optimism may already be reflected in Ferrari’s valuation.
- Some are cautious that the new five-year plan, while prudent, might lack the aggressive targets previously envisioned, seeing it as less of a catalyst for significant multiple expansion.
- Concerns remain over the company’s near-term ability to raise guidance meaningfully, especially following modest commentary on sales and EBIT margin growth.
- The implementation of discounts in peer-based valuation models signals increased scrutiny over maintaining premium multiples, particularly as industry competition intensifies.
What's in the News
- The Board of Directors of Ferrari N.V. authorized a new share buyback plan on October 9, 2025 and announced a program to repurchase up to €3.5 billion of its shares (Key Developments).
- Ferrari N.V. has provided long-term financial guidance for 2030, targeting net revenues of approximately €9.0 billion and EBIT of at least €2.75 billion with a margin of at least 30 percent, driven by a richer product mix and increased personalizations (Key Developments).
- The company proposed to increase its dividend pay-out ratio to 40 percent of adjusted net profit from the 2025 annual results, estimating total dividend distribution of around €3.5 billion from 2027 to 2031 (Key Developments).
- Ferrari revised its 2025 guidance, now expecting net revenues to be greater than or equal to €7.1 billion, up from earlier estimates of greater than €7.0 billion (Key Developments).
- 2025 earnings guidance was confirmed, with expectations for positive product and country mix, improved racing activity contributions, lifestyle segment growth and robust free cash flow generation (Key Developments).
Valuation Changes
- The Fair Value Estimate has decreased from $530.84 to $477.93, reflecting a more cautious outlook.
- The Discount Rate has risen slightly to 15.56 percent, up from 15.49 percent, indicating a marginally higher perceived risk.
- Revenue Growth projections have been lowered, now estimated at 6.70 percent compared to the previous 7.77 percent.
- The Net Profit Margin is expected to be modestly lower, revised down to 23.50 percent from 23.93 percent.
- Future P/E ratio forecasts have also fallen, moving from 58.26x to 55.26x.
Key Takeaways
- 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.
- 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.
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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.
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