Ferrari bears reconsider their position after announcement of strategic plan
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

Ferrari bears reconsider their position after announcement of strategic plan

French bank Societe Generale has long questioned whether Ferrari’s stock is overvalued. But last Wednesday, it changed its tune. Describing the company’s rededication to its highest-end clients as a “game changer”, Societe Generale raised its price target by 40%, and finally changed its recommendation from “sell” to “hold”. Equity analyst Stephen Reitman was succinct in describing the bank’s turnaround: “the facts have changed and so we have changed our mind on Ferrari.”

Ferrari’s share price is up by 11% so far this year

graph 1510 ferrari

SOURCE: Yahoo Finance

The main point for Reitman is that Ferrari should be focussing on its core business of luxury supercars. He criticised the company’s plans to pursue growth through an SUV, as there was widespread competition in that market. Additionally, he added that a “dash for growth” could do serious damage to Ferrari’s perceived exclusivity – the engine upon which its brand runs.

However, in the time since former CEO Sergio Marchionne’s unexpected death (just a few months ago) new CEO Louis Camilleri has chosen to focus his strategy on runs of limited-edition supercars aimed at the highest end of Ferrari’s already high-end customer base. The SUV? It’s still going ahead – but plans have been pushed back two years until 2022.

Reitman said: "The new mid-term plan broadly repeats the key financial objectives laid out in February, but the way Ferrari plans to achieve them appears to have fundamentally altered." A month ago, Camilleri presented his plans (which hew close to his predecessor’s vision) to investors. He described the strategy in the following terms: “This is an ambitious plan, but a doable one based on a concrete, detailed framework.”

Speaking about the now-delayed but still on the table SUV, he added: “As a die-hard Ferrarista, I have been a little skeptical when the concept was first voiced at the board. Having now seen the wonderful design concept, the extraordinary features ... I am a hugely enthusiastic supporter.”

Disclosure

Dominion holds Ferrari in its Global Trends Luxury Fund


If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

Disclaimer
The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.