Ferrari (RACE) stock slipped on Tuesday after the Italian luxury automaker reported third quarter results that were in line with expectations but deliveries that slumped compared to a year ago. Ferrari does expect strengthening sales in Q4 to boost full-year results.
For the quarter, Maranello-based Ferrari reported revenue of €1.64 billion ($1.79 billion), matching estimates as compiled by Bloomberg and up 7% versus a year ago. Adjusted EPS for Q3 came in at €2.08 ($2.27), also matching estimates, and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was €638 million ($695 million), up 7% and slightly ahead of Street estimates.
Despite growth in revenue and profit, deliveries in the quarter dropped 2% versus a year ago to 3,383 units. While most regions saw slight sales growth (led by the Americas at 4%), China shipments tumbled 22%.
Ferrari stock trading on the NYSE closed down 7.36% on Tuesday.
Even with its somewhat lackluster Q3 results and a drop in deliveries, Ferrari reaffirmed its full-year guidance. Ferrari still sees revenue for the year climbing to €6.55 billion ($7.14 billion) with adjusted EBITDA of €2.50 billion ($2.73 billion), as the automaker sees demand in other regions, and its product portfolio, driving results.
“The third quarter once again shows growing results for Ferrari, driven by a strong product mix and increased personalization," said Benedetto Vigna, CEO of Ferrari. "It confirms our commitment to deliver on the promises we made at our Capital Markets Day in 2022, along with the exceptional order book visibility well into 2026.
The Ferrari Purosangue SUV, the Roma Spider convertible, and the 296 GTS sports car drove deliveries in the quarter, Ferrari said. The company noted SF90 XX Stradale supercar deliveries also rose in the quarter, with the sister SF90 XX Spider beginning deliveries.
For Ferrari’s even higher-end cars, customer allocations for the ultra-exclusive Daytona SP3 (MSRP $2.23 million) rose versus the prior year, as expected. The company also debuted its latest hypercar last month, the F80, with all 799 already spoken for despite a price of €3.6 million, or $3.9 million.
Ferrari follows a string of other European automakers like Mercedes, Porsche, and others experiencing sales slumps, especially in Asia, as luxury demand softens in some parts of the world.
Porsche saw 25% of sales stemming from China a year ago (60,747 units) through Q3; those sales fell 29% in the same period this year, down to 43,280 units.
Luckily for Ferrari, China only accounts for 8.3% of all shipments, whereas a year ago Mercedes had a whopping 37% from the region.
In addition, Ferrari benefits from the strength of its brand as arguably the most famous racing team in the world. The Ferrari mystique and its brand tends to insulate the company more than traditional luxury automakers, and despite selling far fewer cars, its high profit margins mean its current market cap of $80 billion easily tops both GM and Ford.
Despite the Q3 delivery slump, some on Wall Street are still bullish on Ferrari, counting on its exclusivity and highly desirable product mix to drive Q4 results and beyond.
CFRA’s Garrett Nelson upped his price target for Ferrari to $460 from $440, though maintained his Hold rating.
Nelson said the price target hike was based on prospects for 2025 P/E (price-to-earnings) ratio growth, in line with Ferrari’s long-term five-year average forward P/E. Nelson also noted Ferrari EBIT margin expanding a full 100 basis points from a year ago, hitting 29.9%.
However, a strong quarter and 2025 outlook weren't enough for Nelson to boost his rating or raise its price target even more, due to the current valuation.
"RACE continues to boast one of the strongest earnings track records (now 17 straight earnings beats), but we view the shares as fairly valued at current levels," he said.
