Ferrari shares race ahead after quick start to this year

by SpeedLux
Ferrari 488 Challenge

Ferrari beat forecasts on Tuesday with a 14 percent increase in first-quarter core earnings, increasing its shares on rising expectations the Italian luxury automaker might soon raise its full-year financial targets.

Milan-listed Ferrari shares increased as much as 5.7 percent on the results, that were led by strong sales of the 8 cylinder Portofino model and the 812 Superfast among higher-margin 12 cylinder models. The stock closed up 3.9 percent.

Ferrari stuck to its full-year targets, but experts stated a boost might be in store.

Present targets look “extremely conservative”, Morgan Stanley experts stated in a note.

Asked about a potential upgrade, Chief Executive Louis Camilleri informed analysts he preferred to wait for second quarter results because of uncertainties including currencies, tariff disputes and Brexit.

“We feel pretty confident we’ll approach the high end of our (guidance) range,” Camilleri stated. “But obviously, given the strength of this quarter, we feel pretty good about the year.”

Adjusted revenues before interest, tax, depreciation and amortization (EBITDA) came in at 311 million euros ($348 million) in January-March, more than the average forecast of 284 million euros in a Reuters poll of experts.

Net revenues increased 13 percent to 940 million euros, topping the average estimate of 864 million euros. Shipments increased in all regions, with China up 79 percent.

Camilleri, who took over in 2018 from late CEO Sergio Marchionne, stated China was one of Ferrari’s great opportunities, though it would need some time.

“I think with the advent of our hybrid models and of the Purosangue (SUV), we will clearly be in a better position to exploit the opportunities that there are in China” he stated.

Jefferies analysts referred the results as “impressive”, adding the first-quarter performance more than supported present consensus expectations for the year, which were already at the top end of the company’s guidance range for adjusted EBITDA. Based on the outcomes, revenue growth might come in at around 7 percent, well higher the current annual forecast, they added.

Ferrari presently expects adjusted EBITDA this year to increase around 10 percent to 1.2-1.25 billion euros. Sales are observed increasing over 3 percent to top 3.5 billion euros.

2018’s plan set a target for adjusted EBITDA in excess of 1.3 billion euros in 2020, but Camilleri stated previously this year he was “very bullish”, betting on new models and special editions at premium prices to lure consumers.

Ferrari is beginning to ship its first 488 Pista Spider model this quarter, while the new Ferrari Monza limited series will be manufactured starting from the fourth quarter.

After introducing the F8 Tributo at the Geneva motor show in March, it will reveal four new models in 2019, including its first hybrid car – excluding special editions – at the end of May, Camilleri stated.

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