UBS: Ferrari is about to go through a 'seismic shift' (RACE)

pulse

July 11, 2017 6:36 PM

After years of controlled supply, Ferrari is set to increase vehicle deliveries—and its stock could reap the rewards.

Italian automaker Ferrari’s stock is up over 70% since its 2015 IPO, and it's not going to slow down any time soon, according to new research from UBS.

Analysts at the Swiss bank predict that a new focus on hybrid models, a utility offering, and higher overall output could send the stock to a new price target of $100—14% higher than Monday’s closing price of $88.

“Based on our recent meetings, we think RACE is poised to launch a new 4-year plan in early with much more aggressive targets than Consensus currently embeds,” UBS wrote in a note Tuesday.

“WethinkRACEwilltargetdoublingrevenueswithamulti-facetedstrategythatincludes muchhigherunitvolumes(largelythroughextensionsintonewcategories), significant price increases, and higher margins.”

Ferrari has hinted at a new vehicle to feed American’s SUV obsession, but details are still scant. Chances are it will be bigger than the family oriented GTC4 Lusso, which debuted last year.

“We think there are ultra-high net worth drivers in the market who would prefer to drive a Ferrari, but purchase a competitor brand to get the utility vehicle experience,” UBS says.

UBS says other factors like Formula 1 could impact sales too, especially if Sebastian Vettel and his Ferrari team can stay on top of the points this season. What’s more, the racing circuit is just making inroads into China “where the brand’s F1 racing heritage doesn’t resonate as well with consumers yet.”

Racing aside, Ferrari is set to launch hybrid technology across all its vehicle segments in 2019, something UBS is incredibly optimistic about.

“We think hybrid will completely change the economic model for Ferrari’s car business,” UBS says.

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