Ferrari (NYSE:RACE) has been upgraded to a ‘Buy’ rating by Jefferies analysts, who cited renewed confidence in the luxury carmaker’s growth trajectory and resilience in volatile market conditions.
The upgrade reflects their expectations of high single-digit growth supported by a combination of stable demand, pricing power, and improving margins. Jefferies forecasts a mid-term earnings per share compound annual growth rate of around 9%, underpinned by what it describes as a durable high single-digit growth algorithm.
Analysts also cited alternative data indicating stabilization in resale values for Ferrari’s core models and strong appreciation in limited-edition vehicles. These trends are seen as reinforcing the brand’s exclusivity and supporting its ability to command premium pricing.
Jefferies expects Ferrari’s valuation premium relative to the broader luxury sector to rebuild toward 50%, positioning the stock as a potential hedge against broader macroeconomic uncertainty.
Recent market dynamics have weighed on Ferrari’s valuation. The stock’s premium to the wider STOXX Europe 600 has narrowed to around 110%, compared with significantly higher levels during previous periods of market stress, including the early stages of the COVID-19 pandemic and the onset of the war in Ukraine.
Historically, Ferrari shares have outperformed the broader market following such downturns, re-rating by an average of 16% relative to the STOXX 600 within three months of market troughs.
Jefferies argues that a recovery in investor confidence around Ferrari’s growth outlook could drive a similar re-rating. The company’s limited and affluent customer base is viewed as relatively insulated from macroeconomic pressures, enabling Ferrari to pass on higher costs more effectively than most automakers.
Attention now turns to Ferrari’s first quarter results, scheduled for 5 May, which analysts believe could provide further confirmation of the company’s growth profile.
Concerns had emerged over potential disruptions to deliveries in the Middle East, which accounts for roughly 5% of shipments and relies on routes through the Strait of Hormuz. However, Jefferies noted that recent updates suggest these risks have been mitigated, with deliveries partially redirected and logistics adjustments underway.
For the first quarter, Jefferies expects shipments to decline by 2.8% year-on-year, offset by a 2.4% increase in average selling prices, supported by a favourable product mix that includes higher-end models. Over the next three years, the bank forecasts organic revenue growth of approximately 6.5% annually.
The upgrade is accompanied by a new price target of €350 per share, based on a projected valuation multiple that implies a continued premium to both the broader market and the luxury sector.
Shares of Ferrari's US-listed stock traded up more than 3% at $338.