Ferrari Shares Downshift On Guidance “Disappointment”

Ferrari NV released its second-quarter earnings report on Wednesday morning, revealing earnings expectations beat Wall Street estimates due to rising luxury vehicle demand, leading the company to increase its full-year guidance. Despite this positive report, some Wall Street analysts called it underwhelming, and others expressed disappointment, suggesting the results did not fully meet their expectations.

The Italian sports-car maker reported adjusted earnings per share of 1.83 euros ($2.01) on revenue of 1.47 euros billion ($1.61 billion) for the second quarter. Wall Street analysts expected EPS of around 1.73 euros on sales of 1.48 billion euros. The company now forecasts adjusted full-year earnings of between 6.25-6.40 euros per share, up from the 6-6.20 range. Nonetheless, this result aligns with analysts’ consensus of 6.34 euros.

Here are the highlights of the second-quarter results (courtesy of Bloomberg):

Adjusted Ebitda EU589 million, +32% y/y, estimate EU577.3 million
Adjusted Ebit EU437 million, +35% y/y, estimate EU406.9 million
Adjusted Ebit margin 29.7% vs. 25% y/y, estimate 27.8%
Adjusted net income EU334 million, +33% y/y, estimate EU305.9 million
Adjusted diluted EPS EU1.83 vs. EU1.36 y/y, estimate EU1.67
Industrial free cash flow EU138 million, +75% y/y, estimate EU141.1 million
Revenue EU1.47 billion, +14% y/y, estimate EU1.46 billion
Cars and spare parts revenue EU1.26 billion, estimate EU1.23 billion
Engines revenue EU27 million, estimate EU31.2 million
Sponsorship, commercial and brand revenue EU148 million, estimate EU131 million
Other revenue EU41 million, +24% y/y, estimate EU36.6 million

Second quarter deliveries:

Deliveries 3,392, -1.8% y/y, estimate 3,127
EMEA deliveries 1,638 units, +17% y/y, estimate 1,453 (2 estimates)
Americas Deliveries 869 units, -17% y/y, estimate 984 (2 estimates)
Mainland China, Hong Kong and Taiwan 339 units, -5.3% y/y, estimate 390 (2 estimates)
Rest of APAC deliveries 546 units, -16% y/y, estimate 656 (2 estimates)

Full-year forecast:

Sees adjusted Ebitda EU2.19 billion to EU2.22 billion, saw EU2.13 billion to EU2.18 billion, estimate EU2.22 billion (Bloomberg Consensus)
Sees revenue about EU5.8 billion, saw about EU5.7 billion, estimate EU5.83 billion
Sees adjusted Ebit EU1.51 billion to EU1.54 billion, saw EU1.45 billion to EU1.50 billion, estimate EU1.54 billion
Sees industrial free cash flow EU900 million, saw up to EU900 million, estimate EU947.9 million
Sees adjusted diluted EPS EU6.25 to EU6.40, saw EU6 to EU6.20, estimate EU6.36

Even though the report was positive, Wall Street analysts, including Bernstein’s Daniel Roeska, found the results less than satisfactory. In a note to clients, Roeska stated that the modest increase in guidance, which merely meets the consensus, “may come as a source of disappointment for some.”

Other analysts had this to say (list courtesy of Bloomberg):

Jefferies, Philippe Houchois (hold)

Guidance upgrade is only “muted,” while Ebitda guidance continues to see pressure from continued high cost inflation as well as rising depreciation and amortization costs

Report was otherwise a “solid” beat, exceeding upper end of consensus on better price realization with better contributions from racing

Bloomberg Intelligence, Michael Dean (no rating)

New outlook “disappointed as it just moved the company to the top end of consensus — and implied a weaker 2H margin” despite record-high list prices for its cars

Notes all cars are sold out until 2025, which may drive concerns over the new 4×4 crossover Purosangue’s margin impact in the second half of 2023

Shares of Ferrari trading in New York in the premarket session fell as much as 4.6%. On a long-term basis, shares are trading well above the upper range of the channel.