Ferrari Stock Soars on Exceeding Expectations and Strong Guidance

Ferrari (RACE) stock surged after the Italian luxury automaker reported impressive financial results and optimistic guidance that surpassed analysts' forecasts. The company's affluent clientele provides insulation from potential tariff pressures.

Fourth Quarter Results Exceed Estimates

Global sales in Q4 increased by 14% to €1.74 billion ($1.8 billion), surpassing estimates of €1.64 billion ($1.7 billion). Diluted EPS came in at €2.14 ($2.22), exceeding expectations of €1.88 ($1.95). EBITDA climbed 15% to €643 million ($666.5 million), approximately €20 million ($20.7 million) above projections.

Bullish Guidance for 2025

Ferrari's positive results have led to increased guidance for 2025. Net revenues are now anticipated to exceed €7 billion ($7.2 billion), up from previous estimates of €6.7 billion ($6.94 billion). Similarly, adjusted EBITDA is projected to surpass €2.68 billion ($2.78 billion), compared to the earlier estimate of €2.56 billion ($2.65 billion).

High Profitability Margin

These projections indicate an EBITDA margin of 38.3% for Ferrari, a remarkable figure in an industry where margins typically range from the mid-single digits to the high-single digits. Despite selling only 13,752 units in Q4, Ferrari's high margins translated to sales revenue of €13.75 billion ($14.25 billion) and a substantial €111,000 ($115,000) profit per car sold.

Geographic Performance and Market Demand

Ferrari's strong performance in the US and Europe offset a decline in unit sales in China. However, China accounts for only 8% of the brand's sales, while North America contributes to approximately 25% of total sales.

Tariff Impact Mitigated by Luxury Appeal

Although the potential for tariffs on EU imports could typically be a concern, Ferrari's average selling price of approximately $500,000 suggests that an additional 10-20% tariff is unlikely to deter its affluent buyers.

Demand Remains Robust

Ferrari's extensive wait list extending through 2026 indicates that demand for its vehicles remains strong. This provides confidence in the company's ability to sustain its financial performance.

Analyst Commentary

Analysts remain bullish on Ferrari, citing its strong brand, loyal clientele, and robust growth prospects. "Ferrari remains a uniquely positioned, defensive business with high single-digit top line growth and double-digit profit growth potential," commented Morgan Stanley analyst Adam Jonas.