Is Ferrari Stock Poised to Race Higher?

The roar of Ferrari's engines has long been synonymous with speed and exclusivity. Now, investors are asking whether its stock—symbolic of luxury and performance—can accelerate further. With a host of analyst upgrades, robust financial results, and strategic bets on electrification and Formula 1 dominance, Ferrari (RACE) is primed to deliver. Let's examine the data to see if this Italian icon is worth a “buy.”

Analyst Sentiment: A “Moderate Buy” With Upside Potential

Analysts entering Q2 2025 were cautiously bullish on Ferrari. As of June 2025, the consensus rating stands at Moderate Buy, supported by 8 Buy, 3 Hold, and 1 Sell ratings. The average 12-month price target is $510.21, implying a 5.7% upside from the recent close of $482.61.

Notable upgrades include Barclays' $553.12 price target (14.6% upside) and Evercore ISI's $565 target (17.1% upside). While some firms, like RBC Capital, trimmed their targets due to valuation concerns, the majority maintain optimism. Even Goldman Sachs, which keeps a Hold rating, raised its target to $569.08, underscoring Ferrari's enduring appeal.

Financial Strength: Revenue Growth and Cash Flow Resilience

Ferrari's financial performance in Q1 2025 reinforced its status as a luxury powerhouse. Revenue surged 13% year-over-year to €1.8 billion, driven by premium pricing and a shift toward high-margin products. Vehicle shipments grew modestly to 3,593 units (+0.9%), but the “quality over quantity” strategy paid off. Hybrid models, such as the 296 Speciale, now account for 49% of shipments, signaling a smooth transition toward electrification.

Even more impressive was the 93% year-over-year jump in industrial free cash flow to €620 million, fueled by operational efficiency and strong demand. Ferrari's order book for 2026 is already fully committed, a testament to its pricing power and brand loyalty. Analysts project €7.0 billion in 2025 revenue (+5% growth) and a robust adjusted EBITDA margin of ~38.3%, underscoring profitability.

Strategic Adjustments: Balancing F1 Dominance and Electrification

Ferrari's dual focus on Formula 1 excellence and its EV future is central to its growth story. In F1, the SF-25 car's mid-season upgrades, including aerodynamic refinements, have propelled it to podium finishes (e.g., Carlos Sainz's second place in Spain). Meanwhile, engineers are already preparing for the 2026 “Project 678” car, which must navigate sweeping regulatory changes. By allocating 300 wind tunnel hours to the 2026 project in early 2025, Ferrari ensures it stays ahead of rivals like Red Bull and McLaren.

On the automotive front, the Ferrari elettrica, priced at €535,000 and slated for late-2025 delivery, is a bold step into the EV market. It combines electrification with the brand's signature performance, targeting eco-conscious luxury buyers. Capital expenditures are shifting to reflect this pivot: by 2026, 35% of CapEx will fund EVs, up from negligible levels in 2023.

Navigating Risks: Tariffs and Supply Chain Challenges

No investment is without risks. Proposed U.S. tariffs on European auto imports—potentially adding 25% to Ferrari's U.S. exports—could crimp margins by 50 basis points, according to management. However, Ferrari's pricing flexibility and loyal clientele may offset this: buyers of a €500,000 car are less sensitive to minor price hikes.

Supply chain bottlenecks and rising costs also loom, but Ferrari's limited production volumes (around 15,000 cars annually) and vertically integrated operations reduce exposure. Its carbon neutrality goal by 2030—including a 90% cut in Scope 1/2 emissions—adds ESG credibility, appealing to institutional investors.

Investment Thesis: A Long-Term Play on Luxury and Innovation

Ferrari's combination of brand strength, strategic foresight, and financial discipline makes it a compelling buy. Key positives include:
1. Analyst Optimism: A consensus Moderate Buy and average target of $510 suggest further upside.
2. Cash Flow and Orders: Strong free cash flow and a fully booked 2026 production line signal confidence.
3. Electrification Leadership: The elettrica positions Ferrari to capture EV luxury demand without diluting its heritage.
4. F1 Leverage: Success on the track drives brand equity and incremental revenue streams (e.g., sponsorships).

Historically, when Ferrari's quarterly revenue exceeded analyst estimates, a buy-and-hold strategy for 30 days delivered an average return of 29.03%. However, this came with significant risk: the strategy underperformed benchmarks, carried a maximum drawdown of -38.06%, and produced a negative Sharpe ratio of -0.28, reflecting elevated volatility. While the returns suggest potential upside during positive earnings surprises, investors must weigh this against the strategy's inconsistent performance and high risk.

Recommendation: Buy with a 12-Month Target of $510

Investors seeking exposure to luxury goods and disruptive automotive trends should consider Ferrari. While macroeconomic headwinds (e.g., tariffs) pose near-term risks, the stock's $510 average target reflects long-term optimism. Holders should anticipate volatility but remain patient: Ferrari's blend of scarcity, performance, and sustainability aligns with the luxury sector's resilience.

Bottom Line: Ferrari isn't just a car company—it's a cultural icon. With disciplined execution on its EV pivot, F1 dominance, and financial strength, RACE is positioned to accelerate ahead of peers.