This article is the 3rd in a 6-part series examining how the drivers of value…
We’ve posted a new note in The Grove updating our research on Ferrari. Given disclosures made by the company over the last month, we’ve upgraded our near-term earnings profile of Ferrari. We now expect EBIT to double in the next 12 months, and surpass €1 billion by 2017, two years earlier than we had initially expected. By next year, Ferrari will have best-in-class EBIT margins, besting out LVMH, Prada, Richemont and Burberry. We’ve also included more information on the jet/helicopter interiors market, which Ferrari will be entering by 2017. We believe the company will be announcing a partnership with Finmeccanica’s AgustaWestland helicopter unit, which also happens to be our second largest position after Fiat-Ferrari. Shares are now trading below the IPO price, and represent a compelling recession-proof opportunity in the next 12 months.
We’ll be posting a publicly-available note for Fiat-Chrysler in the coming weeks. Backing out the value of the RACE shares we’ll receive on 1/4/16, FCA is trading at a 4% discount to distressed and beleaguered Volkswagen, even excluding the massive charges the company will be taking. We’ve also upgraded our earnings estimates for FCA in 2016 given stronger-than-expected results coming out of Latin America. All other regions exactly matched our estimates, which were significantly above an unintelligent consensus.
Ferrari’s Updated EBIT Margin Progression
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