Ferrari shares plunged in European and U.S. trading on Thursday, marking the luxury carmaker’s worst day yet in both markets after it revealed updated earnings guidance that fell well below analysts’ expectations.
Key data
Ferrari shares fell nearly 15% to just over $407 on the New York Stock Exchange at the close of trading, the biggest single-day drop for Ferrari since trading on the stock opened in October 2015.
Shares fell more than 14% in Milan, falling about 60 euros to around 357.60 euros, Ferrari’s biggest single-day loss since the automaker listed its shares on the Italian stock exchange in January 2016.
Ferrari said during its Capital Markets Day event on Thursday that it expected revenue of 7.1 billion euros this year, up from previous forecasts of just over 7 billion euros, while also projecting revenue of around 9 billion euros in 2030 and adjusted profits of at least 3.6 billion euros, up from just under 2.7 billion euros.
RBC Capital analyst Tom Narayan wrote Thursday that while the investment firm was expecting a “conservative” earnings estimate in 2030, these were well below the growth rate Ferrari projected in 2022, suggesting investors would expect a worse-than-expected earnings “reduction.”
Ferrari’s forecasts reflect the “conservatism” of the automaker’s management and are below Citi’s worst forecasts, Narayan said.
New York-based investment research firm CFRA downgraded Ferrari shares to “sell” and reduced its price target for the stock from $475 to $350, citing concerns about slowing growth.
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Crucial ideals
Ferrari CEO Benedetto Vigna, speaking about the manufacturer’s long-term forecasts, stated: “I think an increase in revenue was expected, but I think it’s important that we follow through on what we say. “We cannot commit to something we cannot achieve.”
Contra
Other analysts remained optimistic about Ferrari’s growth prospects: JPMorgan analysts wrote that they had high confidence that Ferrari would meet its long-term goals, citing ample evidence that demand currently far exceeds supply. Deutsche Bank, with similar optimism, upgraded the stock’s recommendation to “buy” and raised its target price to 520 euros.
Tangent
On Thursday morning, Ferrari announced that it would scale back its electric vehicle manufacturing plans. The manufacturer said it would aim for a model lineup made up of 40% internal combustion engines, 40% hybrids and 20% fully electric vehicles, down from previous projections of 40% electric vehicle sales. The change of direction in electric vehicle plans came when Ferrari introduced its first electric vehicle, the “Elettrica”, whose first deliveries, according to Ferrari, would occur in late 2026. Other manufacturers have reduced their electric vehicle sales plans, such as Volvo, which abandoned its plans to exclusively sell electric vehicles by 2030.
This article was originally published by Forbes US
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