Ferrari N.V. (RACE)

Business Description

Ferrari engineers and manufactures some of the world’s most expensive exotic sports cars. The Ferrari brand is synonymous with Formula One racing, exclusivity, Italian design, and state-of-the-art technology. Ferrari also has a captive finance company that provides funding for dealers and clients.

Recommendation (Nov 2020)

An outstanding business, but overvalued at $214.17 per share.

Today, RACE sells 10,131 cars and makes $3.9bn, or $382K per car.
If units sold grows to 15K in 2030 (4% YOY), and sales grow to $16.3bn as PIE implies, then avg. car would retail at $1.09m.
We know RACE has pricing power, but can it sell its cars for 3x today’s prices? Because that is what $214.17 per share implies.

If we assume that EPS will grow between 12-18% CAGR for 5 years and that RACE will trade at a PE multiple of 40x in 2025, then the implied Investor Return would be between 2-7.5%.

For the full report, see link below

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