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Ferrari N.V. Just Reported Annual Earnings: Have Analysts Changed Their Mind On The Stock?

Simply Wall St

Ferrari N.V. (NYSE:RACE) came out with its yearly results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. Revenues of €3.8b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at €3.71, missing estimates by 2.6%. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Ferrari

NYSE:RACE Past and Future Earnings, February 7th 2020

Following the latest results, Ferrari's 16 analysts are now forecasting revenues of €4.12b in 2020. This would be a notable 9.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 7.8% to €4.02. Before this earnings report, analysts had been forecasting revenues of €4.07b and earnings per share (EPS) of €4.11 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at €155, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Ferrari at €206 per share, while the most bearish prices it at €73.60. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Ferrari's rate of growth is expected to accelerate meaningfully, with forecast 9.5% revenue growth noticeably faster than its historical growth of 6.3%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 12% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, analysts also expect Ferrari to grow slower than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Ferrari's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Ferrari. Long-term earnings power is much more important than next year's profits. We have forecasts for Ferrari going out to 2024, and you can see them free on our platform here.

It might also be worth considering whether Ferrari's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.