(Bloomberg) -- Ferrari NV’s outperformance of rival carmakers and luxury-goods brands this year is a reward for its “fierce brand loyalty” and low exposure to China, according to Morgan Stanley analysts, who see the shares extending their record-setting gains.
The Italian firm “stands out among luxury peers,” Morgan Stanley analyst Adam Jonas wrote in a note on Tuesday. “No other major publicly-traded luxury goods company discloses both a higher repeat customer percentage and lower China mix.”
Ferrari shares have rallied 43% this year to a record high, outperforming European automobile peers including Renault SA, Mercedes-Benz Group AG and Volvo Car AB. It is a similar story with luxury peers, where Ferrari is racing ahead of brands including LVMH and Hermes International SCA.
The company now has the largest market capitalization on the Italian FTSE MIB index, made up of the 40 most liquid and capitalized stocks listed on the Borsa Italiana.
Jonas raised his price target to a Street-high $520 for Ferrari’s US-listed shares from $400, implying around a further 6% upside.
About 10% of the company’s revenue came from China in 2023, according to data compiled by Bloomberg, while Ferrari calculates that 74% of its new vehicles are sold to existing customers.
The Chinese economic slowdown is hitting luxury goods companies that have come to rely heavily on the lucrative market in recent years and are now being hit by customers turning more cautious.
China is also heavily impacting the automotive sector, with the European Union now imposing duties on electric vehicles made in the country. The potential impact of the tariffs saw Volvo Car AB trim its auto sales forecast for this year, as its electric vehicles are made in China.
By contrast, Ferrari has recently unveiled a new factory in Italy where it will build the company’s first all-electric super-car as well as other hybrid models.
--With assistance from Isolde MacDonogh and Lisa Pham.
©2024 Bloomberg L.P.
