Group 1 - Ferrari's stock price has experienced a decline, with a drop of 2.5% reported on January 16 [1]

Corporate Calendar - Ferrari N.V. announced its corporate calendar for the year 2026, including key earnings release dates [1] - The earnings releases are scheduled for February 10, May 5, July 30, and November 3, covering the fourth quarter and full-year 2025, and the first and second quarters of 2026 [1] - A conference call for financial analysts will be held on the date of each earnings release, with live webcasts available on the company's corporate website [1] Annual General Meeting - The Annual General Meeting for the approval of the Company's 2025 financial statements is set for April 15, 2026 [2] - The 2026 corporate calendar is also accessible on the company's corporate website [2]

Core Insights - Ferrari enters 2026 with a strong brand, impressive margins, and a disciplined approach to production, but faces new challenges as the market demands proof of its ability to adapt to a changing automotive landscape [1][2] Group 1: Electrification Strategy - The year 2026 will see Ferrari unveil its first fully electric model, which is crucial for demonstrating that the emotional aspects of the brand can be preserved in electric vehicles [4] - The essence of Ferrari lies in its emotional appeal rather than technological advancements, and the company must ensure that the electric model retains the signature Ferrari experience [5] - Success in electrification could enhance Ferrari's legacy, while failure may jeopardize the brand's premium valuation [6] Group 2: Pricing Power and Product Mix - Ferrari's success has historically depended on selling fewer, but higher-quality cars, emphasizing personalization and limited editions rather than volume [9] - As the company transitions to electrification, maintaining luxury-grade margins and pricing power will be critical, especially with new powertrains and models being introduced [8] - Investors will monitor key indicators such as average revenue per car, demand for personalization options, and resale values to assess Ferrari's ability to maintain its exclusivity and pricing power [10]

Core Insights - Ferrari (RACE) is recognized as an iconic brand symbolizing Italian craftsmanship, engineering, and luxury, and has shown strong stock performance since its spin-out [1] Group 1: Investment Strategy - The focus is on businesses with strong cash generation capabilities and competitive advantages, aiming for at least 15 percent annualized returns [1] - The investment approach includes considering takeover targets, provided they maintain a strong business foundation [1] - The investor has achieved an annualized time-weighted return of approximately 16 percent over the past three years, with plans to continue outperforming this benchmark [1]

Core Insights - Ferrari (RACE) is recognized as an iconic brand symbolizing Italian craftsmanship, engineering, and luxury, and has shown strong stock performance since its spin-out [1] Group 1: Investment Strategy - The focus is on businesses with strong cash generation capabilities and competitive advantages, aiming for at least 15 percent annualized returns [1] - The investment approach includes considering takeover targets, provided they maintain a strong business foundation [1] - The investor has achieved an annualized time-weighted return of approximately 16 percent over the past three years, with plans to continue outperforming this benchmark [1]

Group 1 - The core viewpoint is that Ferrari has lowered its expectations, indicating limited potential for positive surprises [1] - The past three months have been challenging since the management outlined its 2030 plan, with growth indicators consistently falling short of expectations [1] - The transition of models and the ramp-up of F80 deliveries suggest a weak start for 2026 [1] Group 2 - Management's focus on negative factors may exacerbate concerns about deeper issues within the company [1] - The forecast for Ferrari's adjusted EBIT margin for 2026 is expected to be between 29% and 30%, with industrial free cash flow projected at 14 million [1] - Due to limited potential for margin improvement and surprises, the rating for Ferrari has been downgraded from "Buy" to "Hold" [1] Group 3 - The target price for Ferrari's stock has been reduced from €415 to €345 [1] - Following this news, the stock price decreased by 0.8% to €320.60 [1]

Core Insights - The analysis of Ferrari N.V. (RACE) has been revisited after one year, indicating that the company remains a focus despite not being analyzed recently [1] - The decision to remain on the sidelines regarding investment in Ferrari has proven to be prudent [1] Company Analysis - The company has been under continuous internal coverage, suggesting ongoing interest and monitoring of its performance [1] - The previous note on Ferrari indicated a cautious approach, aligning with the broader sentiment in the investment community [1] Market Context - The commentary reflects a broader trend among buy-side hedge professionals who are conducting fundamental, income-oriented, long-term analysis across various sectors in developed markets [1]

Group 1 - Ferrari is a legendary name in the auto industry, originally founded as a racing team by Enzo Ferrari in 1929 [1]

Core Viewpoint - Italy is renowned for its prestigious sports car brands, which have thrived due to a combination of historical significance, craftsmanship, and a unique production model that emphasizes quality over quantity [4][9][10]. Group 1: Historical Significance and Brand Development - Italy's automotive industry includes iconic brands such as Ferrari, Lamborghini, Maserati, Pagani, and Alfa Romeo, each with a rich history and unique characteristics [5][6][7]. - Ferrari, founded in 1929, initially focused on Formula 1 racing before expanding into road cars, achieving a record delivery of 7,195 new cars in 2011, solidifying its status in the global market [5]. - Lamborghini, established in 1963, faced bankruptcy in the 1980s but was revitalized under Audi's ownership, producing high-performance models like the Aventador SVJ and Huracan [6]. - Maserati, since its inception in 1914, has been synonymous with luxury and craftsmanship, competing closely with Ferrari [6]. Group 2: Production Model and Craftsmanship - The Italian automotive industry is characterized by a "small and beautiful" production model, focusing on handcrafted vehicles that offer personalized services to customers [9][10]. - Ferrari's production line in Maranello exemplifies this approach, with a daily output of 20 cars, emphasizing quality and meticulous attention to detail [9]. - Pagani produces only about 40 units of its Huayra model annually, showcasing the brand's commitment to craftsmanship and exclusivity [9]. Group 3: Cultural Impact and Market Position - The culture of racing in Italy intertwines with art, making Italian sports cars not just vehicles but expressions of passion and creativity [11][12]. - The unique Italian approach to automotive design and engineering has positioned these brands as luxury collectibles, appealing to a niche market of affluent consumers who value exclusivity and craftsmanship [10][12]. - The emotional connection to speed and performance in Italian racing culture enhances the allure of these brands, making them symbols of aspiration and achievement [11][12].

Core Viewpoint - Investors are evaluating BorgWarner (BWA) and Ferrari (RACE) to determine which stock offers better value for investment at the current time [1] Group 1: Zacks Rank and Earnings Outlook - BorgWarner has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Ferrari has a Zacks Rank of 5 (Strong Sell), suggesting a negative earnings outlook [3] - The Zacks Rank emphasizes companies with positive earnings estimate revisions, indicating that BWA is likely experiencing an improvement in its earnings outlook compared to RACE [3] Group 2: Valuation Metrics - BWA has a forward P/E ratio of 9.44, significantly lower than RACE's forward P/E of 33.39, indicating that BWA may be undervalued [5] - The PEG ratio for BWA is 0.93, while RACE has a PEG ratio of 3.90, suggesting that BWA is expected to grow its earnings at a more favorable rate relative to its price [5] - BWA's P/B ratio is 1.65, compared to RACE's P/B of 20.12, further indicating that BWA is more attractively valued [6] Group 3: Overall Value Assessment - Based on various valuation metrics, BWA holds a Value grade of A, while RACE has a Value grade of F, suggesting that BWA is the superior choice for value investors at this time [6]