Street Calls of the Week
Investing.com -- Ferrari is increasingly being viewed as a rare “quality compounder,” with investors warming to the idea that the luxury carmaker can deliver steady margin expansion through pricing rather than volume growth.
Berenberg said feedback from investors has converged around its view that Ferrari’s 2026 earnings can beat current expectations as higher-priced models such as the F80 and a growing mix of Special editions lift price and mix.
Several funds now agree with Berenberg’s above-consensus margin outlook, more than 31% versus the market’s 30.5%, and see free cash flow surprising on stronger profitability and lighter capital spending.
Berenberg said there is still a pool of potential buyers who sat out the recent rally due to valuation concerns but could return on any weakness, noting some investors regret having exited the stock too early.
However, the bank flagged rising expectations ahead of Ferrari’s upcoming capital markets day, warning that targets seen as conservative, such as mid-single-digit sales growth and 30-33% margins by 2030, could disappoint if the buy-side is already assuming 31% margins by 2026 as a base case.
Recent conversations with dealers pointed to softer residual values in certain models, particularly in the UK, and louder-than-usual complaints from U.S. customers about cancellations, styling and pricing.
Berenberg called these “yellow flags” to monitor but said they do not change its medium-term stance.
The bank launched U.S. dual coverage of Ferrari with a Buy rating and a $570 price target, arguing that the company’s pricing power, long order backlog and 75%-plus cash conversion justify luxury-like valuation multiples similar to Hermes.