Ferrari shares rise after first SUV unveiled as investors appreciate profit opportunities
Ferrari Investors might not have been surprised by news that the Italian luxury supercar maker has finally unveiled its long-awaited first SUV, but shares nonetheless posted a solid gain after falling recently.
Shares were listed at just over €200 on Thursday night, falling from €190 days before the news as investors relished the massive profit margins expected on the Purosangue. There must have been some eyebrows raised in some green quarters with this discussion of the massive 6.5-litre, 700+hp V-12 petrol engines, and no mention of the carbon (CO2) footprint.
Investors are hoping Ferrari’s electrification plans outlined earlier this year ease that kind of pressure. Ferrari has said it will launch its first all-electric car in 2025 and expects it to account for 5% of sales then and 40% in 2030. Petrol/electric hybrids will account for 40% in 2030 with the rest of the internal combustion engines (ICE). Ferrari is expected to introduce hybrid versions of the Purosangue.
Investment bank UBS said the Purosangue’s base price of €390,000 ($390,000) was about €40,000 higher than expected.
“It is significantly higher than most luxury SUVs on the market today, as Ferrari continues to prioritize growth through value over volume,” UBS said.
Other high-priced SUVs include the Rolls Royce Cullinan, Bentley Bentayga, Lamborghini Urus and Aston Martin DBX.
Ferrari said volumes would be limited to around 3,000 Purosangues per year.
“We believe the launch of Purosangue will create more excitement around the brand and also have a positive effect on the rest of the portfolio. In our view, the high ticket price compared to other manufacturers further strengthens Ferrari’s positioning in the super luxury segment, while the more contained volumes reinforce the brand’s exclusivity, an optimal strategy for sustainable growth at long term,” UBS said.
“The price, above all, is around 30% above Ferrari’s average selling price, thus contributing positively to the mix. It is also likely to drive higher personalization content, which has a positive impact on margins. We do not rule out the possibility that Ferrari will expand the Purosangue range by introducing hybrid versions in the near future,” UBS said.
Reuters’ BreakingViews said the Purosangue will give Ferrari a bigger presence in SUV-loving China, which accounts for just 10% of sales.
Bernstein Research also appreciated the opportunities in China and felt that the launch of Purosangue would be key to maintaining Ferrari’s share price valuation as a luxury goods stock, rather than an automaker. more banal. He expected many variations on the theme of Ferrari’s first SUV.
Ferrari shares are valued as being comparable to those of luxury goods makers like Hermès, LVMH, Prada, Ferragamo, Moncler or Richemont with their massive profit margins, rather than those of Volkswagen or Stellantis.
“The Purosangue, and any V6 or V8 variant, is key to maintaining Ferrari’s growth profile and valuation. Investors are looking for higher volumes, especially in China, without significant brand dilution. This will help reduce potential risks associated with Ferraris electrification strategy,” Bernstein said in a report.
“Purosangue cannot be a one-trick pony – investors are waiting for other variants. These will generate the volumes and prices needed for growth beyond 2026. We believe the launch of Purosangue will be a pivotal moment in Ferrari’s recent history, but only as a symbol of the luxury car company’s future prospects,” the report said.
Ferrari said it expects annual profits measured by EBITDA (earnings before interest, tax and amortization) to accelerate to 2.7 billion euros ($2.84 billion) in 2026, up from 1.5 billion euros ($1.58 billion) last year.
Investment bank Goldman Sachs last year changed its investment recommendation from ‘sell’ to ‘buy’, citing the huge expense of adopting electric power and difficulties in replicating its large margins. beneficiaries.