Ferrari (NYSE:RACE) Q4 2025 Earnings call February 10, 2026 09:00 AM ET Company ParticipantsAntonio Picca Piccon - CFOBenedetto Vigna - CEOHenning Cosman - Head of Automotive ResearchHorst Schneider - Head of European Automotive ResearchNicoletta Russo - Head of Investor RelationsThomas Besson - Head of Automotive ResearchConference Call ParticipantsAndrea Balloni - AnalystAnthony Dick - Equity Research AnalystChristian Frenes - Equity Research AnalystEdouard Aubin - Managing Director and Senior Equity Anal ...

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Core Viewpoint - Ferrari's stock has recently experienced a significant dip of 25%, presenting a potential investment opportunity despite the company's historical strength in the luxury automotive sector [2][3]. Group 1: Stock Performance and Market Position - Ferrari's current market capitalization stands at $66 billion, with a current stock price of $368.37, reflecting a 0.96% decrease on the day [4]. - The stock has a 52-week range of $356.93 to $519.10, indicating volatility and potential for recovery [4]. - The company has a gross margin of 51.25% and a dividend yield of 0.91%, showcasing its profitability and shareholder returns [5]. Group 2: Revenue and Growth Projections - Ferrari's net revenue is projected to reach at least €7.1 billion this year, with a forecast of around €9 billion by 2030, which has disappointed some analysts [3]. - Historically, Ferrari has a tendency to provide conservative guidance, often leading to stock price dips followed by stronger-than-expected performance [5]. Group 3: Competitive Advantages and Market Strategy - Ferrari's operating margins have nearly doubled over the past decade, driven by a strategy of limiting vehicle production to maintain exclusivity and pricing power [8]. - The company plans to sell between 15,000 and 17,000 vehicles annually, significantly fewer than mainstream automakers, which supports its premium positioning [9]. - Upcoming models, such as the F80, are expected to have high profit margins, potentially generating 20% of the company's profit from just 2% of its units sold [10]. Group 4: Transition to Electric Vehicles - Ferrari has yet to launch a full-electric vehicle but generates approximately half of its sales from hybrid models, positioning the company well amid industry shifts towards hybrid and extended-range vehicles [13]. - The integration of racing technology into new models and a focus on exclusivity are key components of Ferrari's successful market strategy [14].

Core Insights - Ferrari has a strong history in the automotive industry, known for its technical expertise and racing legacy, which contributes to its success as a luxury car manufacturer [1] - The stock has generated total returns of (14%), 82%, and 93% over the past one, three, and five years, respectively, with only the three-year gain slightly outperforming the S&P 500 [3] - The stock experienced a significant 15% drop after disappointing long-term financial targets were revealed, forecasting a 5% revenue growth and 6% operating income growth from 2025 to 2030 [4] Financial Performance - Ferrari's stock has produced a total return of 673% since its IPO in October 2015, significantly outperforming the S&P 500's 306% return [6] - The company pays a dividend of nearly three euros per share, contributing to total returns [3] - Revenue and net income are projected to increase by 12% and 17%, respectively, from 2019 to 2024, indicating strong financial growth despite conservative management outlooks [8] Market Position - Ferrari's brand is its most valuable asset, emphasizing its status as a luxury goods manufacturer rather than a typical car maker [7] - The company maintains exclusivity by controlling production volumes, with only 799 units of the F80 model being produced, all of which are pre-ordered at a starting price of $3.7 million [7][8] - Currently, Ferrari's shares are trading 25% below their peak, suggesting potential investment opportunities for long-term investors [9]

Core Insights - Ferrari has demonstrated exceptional performance as an investment, with its stock soaring 773% since its 2015 IPO, significantly outperforming the S&P 500's 229% gain [2] - The company possesses a unique economic moat in the competitive automotive industry, characterized by its brand strength, superior margins, and high customer loyalty [14] Financial Metrics - The operating cash flow (OCF) to sales ratio indicates Ferrari's efficiency in converting sales into cash, with Ferrari more than doubling many competitors in this metric and consistently improving it over the past three years [7][8] - Ferrari's return on invested capital (ROIC) is a key indicator of its ability to generate profits from capital, with the company trading at a price-to-earnings ratio of 46 times, compared to the industry average of approximately 17 times, reflecting its status as an ultra-luxury stock [12][11] Brand and Market Position - Ferrari's brand embodies exclusivity and high performance, supported by its impressive racing heritage and financial success, making it a cornerstone investment in automotive stocks [13][15] - The upcoming launch of the F80, priced at nearly $4 million, exemplifies Ferrari's high and sustainable pricing strategy, further solidifying its market position [14]

Core Viewpoint - Ferrari stands out in the automotive industry due to its unique identity, high market value, and impressive profit margins compared to mass-market manufacturers like Stellantis [3][4][5]. Group 1: Company Performance - In the previous year, Ferrari sold nearly 14,000 cars, while Stellantis sold 5.7 million cars, yet Ferrari's market value reached €74 billion (approximately $87 billion), significantly higher than Stellantis's €25 billion (approximately $28 billion) [3]. - Since separating from Fiat Chrysler, Ferrari's sales have nearly doubled since 2015, and its revenue has quadrupled, with its market value increasing about ninefold since its IPO [4]. - Under CEO Benedetto Vigna's leadership, Ferrari has successfully positioned itself as more than just a luxury brand, aiming to outperform even the most valuable luxury companies [4][9]. Group 2: Pricing and Demand - Ferrari has maintained its exclusivity by adhering to the principle of selling "one car less than market demand," resulting in rapid price increases for new models, with the latest 12-cylinder model priced 30% higher than its predecessor [5]. - The upcoming F80 model is expected to generate over €2.3 billion in revenue, and Ferrari has introduced limited-edition models to fill gaps between major releases [5][6]. - Customization options have also increased, allowing prices to rise by 20%, with average spending per owner projected to exceed €500,000 next year [6][7]. Group 3: Customer Loyalty and Marketing - Approximately 80% of Ferrari's customers are existing owners, fostering a strong brand loyalty that drives demand [7]. - Ferrari's marketing strategy involves creating an exclusive community among collectors, with high demand for models like the F80, which has three times the number of orders compared to available units [8]. - The company's marketing director emphasizes the importance of exclusivity, often rejecting potential buyers to maintain brand prestige [8]. Group 4: Competitive Landscape - Ferrari's unique position is contrasted with luxury brands like Hermès, as Ferrari combines traditional craftsmanship with cutting-edge technology and motorsport participation [10][12]. - Unlike Hermès, which relies on a broader range of products, Ferrari's revenue is primarily derived from ultra-wealthy consumers, making it less susceptible to economic downturns [12]. Group 5: Challenges Ahead - Concerns have been raised about Ferrari's aggressive price increases and the potential impact on brand uniqueness if production scales up [13]. - The company faces challenges in transitioning to electric vehicles, with its first electric model, Elettrica, set to launch next year, and delays reported for the second electric model until 2028 [13].

Group 1: Tariff Impact on the Automotive Industry - President Trump announced a 25% tariff on imported cars starting April 2025 and on auto parts starting May 2025, affecting 8 million imported vehicles annually, which constitutes 50% of total new car sales in the U.S. [2] - The automotive supply chain in the U.S. is highly globalized, leading to increased costs for car manufacturers due to tariffs, prompting many companies to raise vehicle prices [2][10]. - Analysts predict that the new car prices could increase by 10% to 15% for vehicles directly affected by the tariffs, while those not fully impacted may see a 5% increase [10]. Group 2: Price Adjustments by Automakers - Subaru announced price increases on several models, with adjustments ranging from $750 to $2055, effective June, citing the need to offset rising costs [3]. - Ford plans to raise prices on three models produced in Mexico, with increases up to $2000, and previously warned of a potential $1.5 billion loss due to tariffs [4][6]. - Ferrari responded quickly to the tariff announcement by increasing prices on certain models by up to 10%, with significant price hikes on high-end models [5][6]. Group 3: Company Strategies and Market Reactions - Some automakers, like Hyundai and Volkswagen, are currently holding off on price increases, with Volkswagen maintaining existing prices until June to avoid consumer burden [7][8]. - Toyota and Honda have chosen to absorb the increased costs temporarily, focusing on cost-cutting and efficiency improvements instead of immediate price hikes [8][9]. - Despite some companies holding off on price increases, the consensus is that price hikes are inevitable as the tariffs remain in effect [9]. Group 4: Market Trends and Consumer Behavior - U.S. light vehicle sales dropped by 10% year-over-year in May, attributed to consumers purchasing vehicles in advance of the tariff implementation [9]. - The ongoing tariff situation is expected to shift consumer preferences towards used cars, potentially driving up their prices as new car prices rise [10].

Core Insights - Ferrari's operations exhibit strong resilience, generating high margins typical of luxury brands, and has a sold-out vehicle priced at nearly $4 million [1] - The company has faced a 25% decline in sales in China during the first quarter, attributed to a shrinking luxury car market and weak consumer sentiment [2] - Ferrari is adapting to the electric vehicle (EV) trend in China, planning to launch its first fully electric supercar, the Elettrica, to boost sales [3][4] Sales and Market Dynamics - Ferrari has limited its sales in China to about 10% of total sales, which has helped it perform better than Western competitors amid a price war [2][6] - The upcoming Elettrica is expected to benefit from lower tariffs, with a tax rate of 30% compared to nearly four times that for 12-cylinder vehicles [4] - The company is poised for growth in China with the potential for increased sales of the EV due to favorable tax conditions [6] Growth Pathways - The launch of the Elettrica will occur in a three-step process, with a technological reveal on October 9 and a world premiere in spring 2026 [5] - The F80, priced at $3.8 million, is anticipated to significantly boost earnings, potentially contributing 20% of company profit from just 2% of units sold [8] - Ferrari's stock has outperformed the S&P 500, gaining 158% over the past three years, indicating strong market performance and growth potential [9] Future Prospects - If the Elettrica is successful in China, it could represent a significant win for Ferrari, enhancing its already strong market position [10]

Core Viewpoint - The recent 25% tariffs imposed by the Trump administration on imported vehicles and automotive parts are expected to significantly impact the automotive industry, but Ferrari appears to be resilient due to its unique market positioning and pricing power [1][2][12]. Industry Impact - The automotive industry is experiencing turmoil due to the new tariffs, leading to a decline in many automotive stocks, with few exceptions like Ferrari [2][3]. - The tariffs are particularly burdensome for luxury vehicle manufacturers, as the 25% tariff on Ferrari's ultra-luxury vehicles represents a substantial cost compared to mainstream vehicles [5]. Company Performance - Ferrari's typical consumer base is less affected by economic downturns, which contributes to the stock's resilience during recessions [5]. - The company maintains strict exclusivity by limiting vehicle production, which helps sustain high demand and strong pricing [6]. - In the fourth quarter, Ferrari's sales volume increased by 2%, while revenue surged by 14%, indicating strong pricing power with an average vehicle price exceeding $500,000 [6][7]. Financial Strength - Ferrari's operating profit rose by 26% year-over-year in the fourth quarter, and earnings per share increased by 32%, showcasing its robust financial performance [7]. - The company has consistently demonstrated revenue growth over the years, even recovering quickly from the pandemic's impact [9]. - Ferrari's stock has appreciated by 627% over the past decade, significantly outperforming the S&P 500's 151% gain [11]. Investment Outlook - The company's ability to pass on tariff costs to its affluent customer base reinforces the argument for Ferrari as a smart investment choice [12]. - A recent $2 billion share-buyback program indicates management's belief in the stock's undervaluation, further enhancing its investment appeal [9].