Ferrari (NYSE:RACE) shares have caught the attention of investors this week, with activity reflecting broader movements across the luxury auto sector. Recent performance hints at shifting sentiment from traders as they weigh outlooks for the brand over the coming quarter.
Ferrari’s share price has cooled off after rallying earlier this year, with a recent 30-day pullback of 14.3% and a total shareholder return of minus 16.3% over the last 12 months. Still, the company’s impressive 111.5% total return over three years highlights its enduring strength. However, momentum now seems to be fading for the moment.
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With Ferrari’s recent pullback and a current share price sitting below analysts' targets, investors are left to consider if this signals an undervaluation, or if the market has already factored in the company’s growth potential. Is now the moment to buy?
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Most Popular Narrative: 14.7% Undervalued
Ferrari's strongest-followed narrative assigns a fair value of $477.93, which is higher than the most recent close of $407.46. This perspective weighs updated profit forecasts, new model momentum, and ongoing industry changes as key drivers behind the stock's potential re-rating.
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.
Want to understand what’s really driving that premium valuation? The narrative hinges on bold financial targets for revenue growth and profit margins, as well as unprecedented ambitions for electrification and personalized luxury. The story behind these projections might surprise you. Explore the full details for the inside scoop on Ferrari’s future value.
While analyst targets suggest Ferrari might be undervalued, the current price-to-earnings ratio of 39.2x tells a different story. That is more than double the global auto industry average of 18.4x, and well above its closest peers at 16.5x. The fair ratio for Ferrari is estimated at 14.2x, suggesting the market is pricing in hefty performance expectations. Does this premium reflect true opportunity, or is it a setup for disappointment if growth stalls?
If you have a different perspective or want to dig deeper into the numbers yourself, you can craft your own narrative in just a few minutes. Do it your way
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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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