Goldman Calls Ferrari Selloff Overdone, Highlights “Unmissable” Entry Point

Ferrari shares have plunged since late last week’s quarterly results, which, despite reaffirming full-year guidance, revealed plans to ease vehicle pricing. The move sparked concerns among Citi analysts, who question whether the luxury sports carmaker can maintain its high profitability amid slowing sales volume and weakening pricing power. 

For Goldman analysts, Ferrari’s (RACE) 16% plunge over just a few short days, including its largest single-day decline in nine years on Thursday (-12%), has created a potential buying opportunity.

RACE now appears relatively cheap compared to its historical valuation versus the Stoxx Europe Automobiles & Parts Index (SXAP).

Here are the key points from Goldman analyst Jeremy Elster, explaining to clients on Monday morning about a buying opportunity emerging for RACE shares. 

The current drop in Ferrari’s valuation versus the SXAP is one of the biggest ever—only rivaled by the crash in mid-2020.

This is called a “sector relative de-rating”—Ferrari has underperformed the auto sector unusually sharply.

This “dislocation” creates a potential buying opportunity.

Elster suggests high-quality growth stocks like Ferrari are now available at “reasonable prices.”

Elster’s complete take on RACE:

This dynamic is creating some unmissable opportunities to buy high quality growth stocks at reasonable prices. As far as historic dislocations go, Ferrari’s current de-rating vs the SXAP is one of the more notable – this latest sector relative de-rating for RACE is the most severe in its history as a listed company, comparable only to the extremes of mid-2020 (see chart below).

Ferrari’s p/e premium vs SXAP has halved, despite a relative eps trend (purple line) that continues to accelerate.

After Thursday’s call, bears were focused on the company’s admission that they had been compelled to take action on residual value weakness in some regions (including the US) and leaned into the Daytona phase-out headwind that is likely to impact q3. From here, the shares seem likely to find support – for me the key points from the call were that the order book remains sold out through to ’27, and cost pressures are seen easing into h2 (making the guide look comfortable even before any additional help from the top-line). The company host a CMD in early October where we will hear more on future electrification plans, as well as see new targets through 2030 which should underscore RACE’s credentials as one of Europe’s most uniquely dependable earnings growth stories.

Despite short-term headwinds, Ferrari remains fundamentally strong with vehicles sold out through 2027.