What to watch: Ferrari, WSP and Shopify

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What to do with titles from Ferrari, WSP and Shopify? Here are some analyst recommendations that are likely to change prices soon. Note: the author may have a completely different opinion than the one expressed by the analysts.

Ferrari (RACE, $401.48): expectations are too high fans

The rocking horse company posted a series of results roughly in line with expectations for the first quarter, with revenue, operating profit and earnings per share in line with consensus.

Most investors probably didn’t expect the company to raise its full-year outlook in the first quarter, but they expected first-quarter results to be higher than consensus, but on the other hand, they also expected them to be higher than they actually were.

These expectations contributed to a -6.2% decline in Ferrari shares. Ryan Brinkman, an analyst at JP Morgan, explains this negative reaction by saying that the company has provided conservative forecasts in the past and regularly exceeded them.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at €605 million (€M), right in line with consensus of €605 million, but just below Ryan Brinkman’s €611 million .

EBITDA margin came in at 38.2% compared to 38.6% consensus and JPM analyst 38.3%, leading to earnings per share of €1.95 compared to €1.86 for consensus and €1.82 for JPM.

Looking ahead, management said Purosangue deliveries accounted for around 16% of total units in Q1 2024, with demand for the model remaining strong and hybrid penetration increasing to 46% compared to 35% in Q1 2024. quarter of the previous year.

“We have a lot of confidence in management’s ability to execute on its long-term plan, given the amount of evidence that demand is currently significantly outstripping supply; for example, customers sometimes have to wait a year or more to receive a shipment.” notes the analyst.

It was recently announced that the entire production run of the new F12 TDF has been completely sold to its loyal customers.

There is likely a supply level below which expansion would hurt exclusivity and thus prices and profits, but the analyst doesn’t know exactly where that line lies, although he believes it is well above 10,000 units per year.

Ryan Brinkman believes that Ferrari is benefiting from a very high conversion on higher sales from the sports car segment, probably up to 50%. Ferrari is the brand with the most victories in Formula 1 history.

Ferrari has seen its profits rise sharply in recent years thanks to several factors that are expected to continue, including a gradual increase in volume and a reduction in spending on motor racing.

Ryan Brinkman maintains his price target of $355 through the end of 2024 and his “neutral” recommendation on the Maranello-based maker’s name.

Matthew Hains

WSP Global (WSP, $215.51): up after a year of consolidation

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