Analyst Estimate: Ferrari’s Global Revenues to Grow Steadily
Ferrari's 2016 and Beyond: Most Analysts Covering It Say "Buy"
Revenue estimates
Analysts are estimating Ferrari’s 2015 revenues to have grown at a rate of 3.6% to around 2.8 billion euros. That would be close to $3 billion. This rate of growth is considerably lower than in the previous year when Ferrari recorded a revenue growth of 18.3%. This sudden spike in the company’s 2014 revenues could be attributed to the shipments of its limited edition hybrid ‘LaFerrari’. This exclusive car was launched in November 2013 and the company planned a production run of only 499 units.
Note that this is the first Ferrari (RACE) car ever with a price tag exceeding 1 million euros. Now, let’s take a look at analysts’ estimates for Ferrari’s revenues for the coming years.
Revenue growth: 2016 and beyond
For 2016 and 2017, analysts are estimating Ferrari’s global revenues to grow at a rate of 3.6% and 3.1%, respectively. Along with analysts’ recommendations, it’s also important for investors to pay attention to these revenue estimates. They may reflect market expectations from the company. These estimates can also serve as a proxy for what might be priced into the market.
Investors should be aware that Ferrari can be seen as a luxury product manufacturer rather than just an automaker. The company follows a low volume strategy to maintain the exclusivity of its cars. According to the company’s guidance, Ferrari is expected to raise its sales volume to ~9,000 units per year by 2019. This number reflects a sales volume rise of 17% from expected deliveries of 7,700 units in 2016. This gradual rise could be one of the reasons why analysts are expecting Ferrari’s revenues to grow at a steady pace in coming years.
Currency tailwinds
US-based automakers like Ford (F) and General Motors (GM) face the negative impact of a strengthening US dollar. However, Ferrari’s reporting currency is the euro as the company is based out of Italy. The euro has dramatically fallen against all major currencies, including the US dollar, by nearly 11% in 2015. Having a ~30% exposure to the US market among all of its major geographical markets, Ferrari benefited from the weakening European currency.
Note that Honda Motors (HMC) and Toyota (TM) are major automakers (FXD) that also benefited from the favorable movement in the currency market—the weakening yen in their case—last year.
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