Ferrari is taking on Tesla
Morgan Stanley analysts raised Ferrari's price target from $72 to $100 following a first quarter in which the Italian auto manufacturer increased its shipments by 6.4% and net revenue by 21.5% YoY.
And Ferrari is encroaching on Tesla's turf. The Morgan Stanley analysts, who have been especially bullish on Tesla, have now moved Ferrari ahead of Elon Musk's company in their pecking order of stock picks. Ferrari, meanwhile, is targeting electric vehicles as a potential growth area.
With a full order pipeline for the next 12 months, Ferrari is projecting a total of 8,400 shipments in 2017. But the auto company is looking to increase yearly shipments above the 10,000 mark. Ferrari CEO Sergio Marchionne was short on details in the Ferrari's earnings call, but expressed confidence in his company's ability to reach that goal.
"Yes, it's going to go beyond 10 [thousand]," said Marchionne. "How that takes form is something that is now being analyzed in detail."
Marchionne made clear that protecting Ferrari's share of the sportscar market along with introducing new innovations - in particular, electric vehicles - would push the Italian auto maker beyond the 10,000 mark.
"I think that there is now a view inside the house that electrification is a core skill that needs to be mastered and needs to be part of the offering of the combustion engine world," said Marchionne.
Morgan Stanley analysts apparently share Marchionne's optimism.
A Morgan Stanley note saw the increased price of Ferrari's stock as justified when accounting for "the introduction of an all new model that we anticipate will reasonably expand the top line by approximately 30% and profitability by more than 40% by late 2020/early 2021."