Street Calls of the Week
Investing.com -- UBS Global Research has begun coverage on two Italian yacht makers, Ferretti SpA and Sanlorenzo SpA, assigning both companies “buy” ratings.
Shares of Ferretti and Sanlorenzo were up 2.9% and 1.6% at 07:23 ET (11:23 GMT).
The brokerage issued a price target of €4.35 for Ferretti and €47 for Sanlorenzo, citing strong fundamentals, resilient industry dynamics and consistent cash generation across the luxury yacht sector.
UBS described Ferretti, a shipbuilding group known for its custom-made luxury yachts, as a leading name in a market characterized by low volumes and high values.
The brokerage noted that Ferretti holds about a 17% overall market share, with more than 25% share in the most profitable categories, large composite yachts above 24 meters and made-to-measure models above 30 meters.
The brokerage highlighted that global demand for yachts exceeds supply, giving leading brands strong pricing power.
UBS pointed to production timelines of four to five years and direct-to-customer sales, which provide steady revenue visibility.
Working capital conditions remain favorable, supported by deposits and milestone payments received before production costs.
UBS expects Ferretti to post a 7% mid-term revenue CAGR and 9% EBITDA CAGR through 2029E.
The analysts cited the company’s multi-brand strategy and potential for bolt-on M&A as additional growth levers.
Ferretti trades at 3.9x consensus EV/EBITDA, which UBS said is in line with its long-term average but 41% below peer Sanlorenzo.
The valuation model used a 6.2x EBITDA multiple and a DCF approach with a 2% terminal growth rate (Tg) and 11.4% WACC, followed by a 10% discount for majority-shareholder overhang.
Turning to Sanlorenzo, UBS described it as an Italian shipbuilder focused on made-to-measure yachts and operating at the top end of the market.
The company sells about 70 yachts annually, a scale UBS said offers protection from cyclicality. The Bluegame and Nautor Swan divisions contribute less than 20% of total revenues, adding diversification and efficiency benefits.
UBS cited Sanlorenzo’s long-term performance, with a 15% revenue CAGR and 19% EBITDA CAGR over 25 years. The research team expects 6-6.5% growth from 2027E, supported by stronger margins and product mix improvements that could lift profitability to 20% in the mid-term.
Sanlorenzo trades at 6.6x consensus 12-month forward EV/EBITDA, 13% below its long-term average of 7.6x.
UBS noted that it also trades at a 12% discount to comparable shipbuilders and a 63% discount to luxury peers, a valuation gap seen as excessive.
UBS based its €47 price target on a 7.5x EBITDA multiple and a DCF model using a 2% Tg and 10.1% WACC.
UBS added that both companies are positioned to benefit from steady post-pandemic normalization in yacht demand, ongoing pricing strength and favorable capital dynamics.
The analysts said current valuations offer an attractive entry point for investors seeking exposure to the luxury yacht industry’s leading European names.