Ferrari's Stock Dip Seen as Opportunity by RBC Capital Despite Recent Decline

RBC Capital analyst Tom Narayan maintains an Outperform rating on Ferrari (RACE) with a price target of EUR 500. Despite the stock's 12% drop, the firm sees this as an overreaction, suggesting it's a buying opportunity due to Ferrari's historical quick recoveries from sell-offs. Narayan views Ferrari's decision not to adjust 2025 targets and comments on residual values and CFO strategy as non-issues.

Title: RBC Capital Analyst Maintains Outperform Rating on Ferrari Despite Recent Sell-off

Ferrari (RACE) has seen its stock price drop by 12% recently, but RBC Capital analyst Tom Narayan remains optimistic, maintaining an Outperform rating with a price target of EUR 500. Narayan views the recent sell-off as an overreaction and sees it as a buying opportunity due to Ferrari's historical quick recoveries from market corrections [2].

The analyst's positive outlook is based on several factors. Firstly, Narayan does not consider Ferrari's decision not to adjust its 2025 targets as a significant issue. Secondly, he believes that residual values and the company's cash flow strategy remain robust. These factors, combined with Ferrari's strong brand loyalty and controlled production model, contribute to the analyst's bullish stance.

Ferrari's recent second-quarter results, while not meeting all expectations, did show a 4% increase in revenue and a 6% rise in operating profit. These figures indicate that the company is navigating the challenging market conditions effectively. The full order book through 2026 also provides a buffer against short-term volatility [3].

Narayan's price target of EUR 500 reflects his belief in Ferrari's ability to maintain its premium margins and brand exclusivity. Despite the potential risks of geopolitical volatility, electrification challenges, and valuation stretch, the analyst sees Ferrari's strategic pricing flexibility and strong fundamentals as reasons to remain confident [4].

Ferrari's ability to adapt its pricing strategy to trade tensions and maintain high margins makes it a standout in the luxury automotive sector. The company's valuation, while lofty, is supported by a strong order book, brand loyalty, and a controlled production model that drives demand. However, investors should monitor Ferrari's Q2 2025 earnings report and its ability to navigate the EV transition without diluting its brand's exclusivity.

For investors with a long-term horizon and a high risk tolerance, Ferrari remains a compelling play. Its strategic pricing flexibility, combined with a 2025 adjusted EBITDA target of €2.68 billion, suggests its moat is intact. Yet, investors should be aware of the potential risks and monitor the company's performance closely.

References:
[1] https://www.cnn.com/markets/stocks/RACE
[2] https://www.marketscreener.com/news/ferrari-rbc-keeps-its-buy-rating-ce7c5fddd088f72c
[3] https://sg.finance.yahoo.com/news/ferrari-just-stalled-why-luxury-190112285.html
[4] https://www.ainvest.com/news/ferrari-pricing-dilemma-italian-icon-maintain-premium-margins-changing-luxury-market-2508/