UBS Group AG's outlook for Ferrari NV (RACE.US) is strong in the beginning of Q1: will showcase a unique business model, maintaining a buy rating.

UBS Group AG released a research report looking ahead to Ferrari NV's first quarter performance, stating that they are optimistic about the investment prospects of Ferrari NV in the luxury goods sector facing challenges. The bank has lowered its earnings per share expectations for the next three years by 3%, lowered the target price but maintains a buy rating. The bank expects Ferrari NV's first quarter performance to once again demonstrate its brand strength and superior business model. Despite a complex macroeconomic situation, demand in the high-end market continues to exceed supply. In addition, Ferrari NV announced this week that it will raise prices for some models in the US market by up to 10% to cope with a 25% car tariff. This measure will have a limited impact on company profits, with profit margins potentially facing a 50 basis point risk, but it highlights Ferrari NV's unique pricing power and eliminates a major key disadvantage for the stock. The bank expects Ferrari NV to have a strong start this year, with the first quarter possibly being the strongest quarter of the year, not yet affected by tariffs, and delivery of the Daytona model reaching its highest level of the year. Due to its focus on scarcity-oriented business strategies, strong customer relationships, and strong execution and stable performance, the bank continues to be optimistic about Ferrari NV in an environment where the luxury goods industry as a whole is facing challenges. Due to foreign exchange and tariff effects, the bank has lowered its earnings per share expectations for 2025/2026/2027 by 3%. Maintains a "buy" rating. First quarter performance outlook: strong start Ferrari NV will announce its first quarter earnings before the opening of the US stock market on May 6. The bank expects group sales for the first quarter to be 1.775 billion euros, up 12% year-on-year at fixed rates and reported rates (foreign exchange impact negligible). In the automotive and parts sector, revenue is expected to grow by 10% at fixed rates, with shipments up 4% year-on-year. The product mix and slightly higher than last year's personalized customization services (sales ratio increased from 19% to 20%) will contribute 7% to the price mix. The bank expects sponsorship, business, and brand revenue to grow by 30% year-on-year, mainly benefiting from HP Inc.'s sponsorship and increased F1 event revenue. Since the profit and loss statement has not yet been affected by US tariffs, the bank expects EBITDA for the first quarter to be 686 million euros, with a profit margin of 38.7%, up 50 basis points year-on-year; EBIT is expected to be 523 million euros, with a profit margin of 29.5%, up 160 basis points year-on-year. The bank has lowered its earnings per share expectations for 2025/2026/2027 by 3%. The main drivers include: a) updates to foreign exchange rates, leading to a headwind of 90 basis points for revenue in 2025 and a slight negative impact on profit margins; b) implementation of US tariffs, while price increases increase organic growth rate by 120 basis points, they have a negative impact on profit margins. Overall, the bank expects EBITDA profit margins to decline by 8% to 37.7% in 2025, and EBIT profit margins to decline by 7% to 28.7%. Valuation: Buy, target price $520, potential upside 11% Ferrari NV's current valuation is 27 times expected EV/EBITDA for 2025, 25 times expected for 2026, with compound annual sales and earnings per share growth rates of 8% and 9% respectively for 2024-2027. The bank's target price is based on a forward EV/EBITDA multiple of 27.5 times (previously 31.3 times). Due to profit forecast adjustments and industry valuation multiples decline, the bank has lowered the target price.