Core Viewpoint - Ferrari's stock (RACE) has experienced a 19% decline over the past week, currently trading at $389.56, with concerns about its high valuation suggesting a potential price target of $273 [2][3] Stock Assessment - The stock is considered relatively expensive despite its strong operating performance and financial condition, indicating a need to reduce exposure [2][3] - A diversified investment approach is recommended over relying on a single stock, as evidenced by the performance of the Trefis High Quality Portfolio [3] Company Overview - Ferrari has a market capitalization of $70 billion and operates in the luxury performance sports car segment, licensing its brand for lifestyle goods and running retail stores and themed entertainment parks globally [4] Financial Performance - Revenue growth has averaged 15.7% over the last three years, with a 12% increase from $6.1 billion to $6.9 billion in the last 12 months, and a quarterly revenue growth of 13% to $1.8 billion [5] - Operating income for the last 12 months was $2.0 billion, with an operating margin of 28.9% and a cash flow margin of 33%, generating nearly $2.3 billion in operating cash flow [7] Profitability and Financial Stability - Net income for the same period was approximately $1.6 billion, resulting in a net margin of about 23% [7] - The company's debt stood at $3.3 billion, leading to a debt-to-equity ratio of 4.8%, while cash and cash equivalents accounted for $1.9 billion of total assets of $9.9 billion, yielding a cash-to-assets ratio of 19.4% [7] Market Resilience - Ferrari's stock has shown resilience during economic downturns, recovering fully from declines faster than the S&P 500 index during the 2020 COVID-19 pandemic and the 2022 inflation shock [6][8]