Ferrari

Following the announcement of the 25% tariffs on imported cars in the US, Ferrari posted a press release to reassure market. Ferrari annual sales in the US are approximately 4,000 cars, around 27% of deliveries, generating around €2.2 billion in revenue, and accounting for 35%-40% of its EBIT).

Ferrari will pass a 10% price increase to all models but three (Ferrari 296, SF90, and Roma).

The group confirmed its FY guidance with a potential 50-basis-point reduction in EBITDA (guidance of at least 38.3%) and EBIT (guidance of at least 29%).

Following talks with the company, we believe this is achievable and we reiterate our buy recommendation due to its unique business model, strong visibility (with 2025 and 2026 production already sold out).

The idea that a 25% tariffs needs to be met with a 10% price increase is interesting to us. We still believe the tariffs in the US will have a substantial impact on demand but the fact that they can pass price increase to other customers with not a lot of concerns on demand is interesting. Bear in mind Ferrari isn’t a car manufacturer but a luxury company that happens to manufacture cars, which is quite different. Now the question remains on the elasticity of demand. There is a point when some buyers are deterred from buying luxury items. We are unable to say where that price point is but considering the current environment, a 10% increase will push us closer to that point.

In all, while we acknowledge the resiliency of the business model, we think these good fundamentals are largely priced in with a PE25 and 26 at 40.5x and 37.1x. This is slightly less expensive than Hermes but still remains too high to our liking. We would stay away for the time being as the risk reward profile seems skewed to the downside.