Ferrari stock surges on upbeat 2024 profit forecast, as luxury demand remains strong

Ferrari (RACE) shares are charging higher today after the Italian luxury automaker reported Q4 sales results that topped expectations and that it sees momentum continuing in 2024. The Maranello-based automaker is also rumored to have signed Formula 1 seven-time champion Lewis Hamilton to its racing team, giving Ferrari fans (and some investors) even more reason to cheer.

For the quarter, Ferrari reported revenue of 1.52 billion euros ($1.65 billion), topping estimates of 1.50 billion euros ($1.63 billion), as compiled by Bloomberg. Ferrari said its sales jumped 11% from a year ago. On the profitability front, Ferrari reported adjusted EBITDA of 558 million euros ($606 million), slightly missing estimates of 560 million euros ($608.2 million). For the year, Ferrari’s net profit surged 34%, topping 1 billion euros for the first time, to a record 1.257 billion euros ($1.3 billion).

Ferrari Purosangue SUV at the ‘Gamechangers’ display at the Vessel in NYC, October 17th 2023 (credit: Pras Subramanian) (Pras Subramanian)

What’s exciting investors is Ferrari’s guidance for 2024, with the automaker seeing revenue climb to 6.4 billion euros, with adjusted EBITDA of 2.45 billion euros ($2.64 billion), as the automaker sees luxury demand staying strong.

“2023 was a very successful year, during which we strengthened our brand through a number of achievements reflected in our unprecedented financial results,” Ferrari CEO Benedetto Vigna said in a statement. “The record 2023 results, the ambitions that we have on 2024, together with the exceptional visibility on our order book allow us to look at the high-end of 2026 targets with stronger confidence.”

Ferrari’s long-term 2026 target includes a product mix of 40% gas powered cars and 60% hybrid cars, and EBITDA target of 2.5 billion to 2.7 billion euros ($2.72 billion to $2.93 billion) with an EBITDA margin of 38%-40%.

From a deliveries standpoint, Ferrari shipped 13,663 cars in 2023, up 3% from a year ago, with deliveries to the Americas driving growth, up 10.6%. Ferrari said gains were driven by its new Purosangue SUV, and its 296 and SF90 hybrid sports cars. Ferrari will launch its first full EV in Q4 of 2025 and is building a new factory in Maranello to assemble hybrid and EV vehicles.

“We note the company’s long history of providing conservative guidance, and there appears to be a healthy dose of conservatism in its assumptions for 2024,” CFRA analyst Garrett Nelson said in a note to investors. Nelson reiterated his Buy rating on Ferrari and upped his price target $25 to $385, citing Ferrari’s “stellar earnings track record (14 straight bottom-line beats).”

FILE – Mercedes driver Lewis Hamilton of Britain arrives at the Bahrain International Circuit in Sakhir, Bahrain, Thursday, March 2, 2023. Seven-time Formula One champion Lewis Hamilton has been linked with a shock move from Mercedes to Ferrari next year. (AP Photo/Frank Augstein, File) (ASSOCIATED PRESS)

One piece of news that is upstaging Ferrari’s strong quarterly and year-end results is rumors of a driver lineup change with its Formula 1 team, Scuderia Ferrari.

Multiple media outlets are reporting 7-time champion Lewis Hamilton is close to making a shock switch from Mercedes’ F1 team, where he has driven since 2013, to Scuderia Ferrari for the 2025.” Hamilton reportedly has a contract through 2024 with Mercedes, but only has an option for 2025, allowing him to leave for Ferrari at that time.

The BBC is reporting Mercedes F1 team principal Toto Wolff has informed staff of Hamilton’s departure, with news to be officially announced late Thursday.

In addition to his 7-world championships, Hamilton has the most wins of any driver in F1 history and would be joining the most storied team in the F1 paddock. Scuderia Ferrari, operating since 1929, has 16 constructors’ world championships, but hasn’t won the title since 2008.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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