Ferrari Shares Slide to New Low

Posted on November 17, 2015.


This article by Kristen Scholer was posted on the Wall Street Journal’s Blog:


Ferrari NVRACE shares were rolling downhill on Monday.

line-graph-going-downShares of the luxury automaker are off 2.1% to $50.30, on track to close at their lowest level since debuting in October, after a batch of analysts initiated coverage on the stock almost a month after it went public.

There was something for every investor in the analyst notes with UBS initiating the stock with a “buy” rating, J.P. Morgan Chas & Co. rating the stock as “neutral” and Evercore ISI giving Ferrari a “sell” rating.

The mix of analyst views comes as Ferrari’s stock has slid 16% from its opening price of $60 when it launched Oct. 21. The night before the company’s public debut, shares priced at $52 each, at the top of the expected range, showing investors were willing to pay up for a firm with a strong brand.

UBS, for one, is optimistic on the stock, expecting it to return to its opening debut price of $60 over the next 12 months. Analysts at J.P. Morgan and Evercore ISI are taking a more cautious view though.

J.P. Morgan said it sees “strong earnings growth medium term” for Ferrari, driven by increasing demand for its cars, the scaling back of racing-related research and development costs, the roll-off of costly currency hedges and the realization of lower commodity prices and savings on other manufacturing costs.

The bank said the latter three factors likely only represent one-time opportunities though and that it views the valuation as fair, which is why it rated the stock at neutral. J.P. Morgan gave shares a $52 price target, 3.4% above where they recently traded Monday.

Over at Evercore ISI, analysts wrote that Ferrari’s margins remain lower than its peers and that its products need updating and refreshing. Evercore gave shares a $40 price target, the lowest among all Ferrari analysts surveyed by FactSet.

The analyst initiations on Ferrari come 25 days after the company’s shares debuted in late October, the typical waiting period for analysts from firms that work on IPOs. J.P. Morgan and UBS were both underwriters on Ferrari’s deal.

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