AUTOITALO

Ferrari sees strong demand stretching into the distance

2022 13,321 18.5% Higher Than 2021

Sales have grown year over year consecutively for six years running.

The company is expanding its reach by entering the SUV market

Q1 2023 total shipments of 3,567 units, up 9.7% versus Q1 2022

• Net revenues of Euro 1,429 million, up 20.5% versus the prior year

• Adjusted EBITDA of Euro 537 million, up 27.0% versus prior year

• Adjusted EBIT of Euro 385 million, up 25.3% versus the prior year

• Adjusted EBITDA margin of 37.6% and Adjusted EBIT(1) margin of 26.9% in the quarter

• Adjusted net profit  of Euro 297 million and adjusted diluted EPS(1) at Euro 1.62

• Industrial free cash flow  generation of Euro 269 million

Ferrari, an Italian luxury sports car founded by Enzo Ferrari in 1939, makes an average of $80,000 per car sold, according to a German study conducted by Dr. Ferdinand Dudenhoffer, a director with CAR-Center Automotive Research based in Duisburg, Germany.

That $80,000 is as much as a whole other luxury car — you could buy a Mercedes-Benz C-Class ($73,500) or Tesla Model X ($79,500).

Ferrari is one company that not only carries perhaps the best stock ticker symbol of them all but is also gaining more traction in popularity and is becoming a brighter blip on the radar of investors. Let's look at what the company has going for it. 

Ferraris can cost anywhere from about $200,000 to over $300,000 per car (much more for classic models sold at auction or limited edition cars).

Looking at Ferrari's stock price change since November might lead investors to think Ferrari is not doing so well, declining by 20% from a high of $278 down to $224. But one listen to its recent earnings call tells a different story. While Tesla and Ford have seen their share of the limelight related to electric vehicles, Ferrari has quietly been doing what it does best: selling high-quality supercars.

Dudenhoffer tells CNBC Make It that he determined the average $80,000 profit by taking annual revenue and EBIT (before interest and tax) for the first half-year reports of 2018 and dividing it by the number of sold cars. "Then we arrive at the average price of a car or average EBIT profit per car."

By comparison, Porsche, whose cars sell for about $50,000 to $150,000 (with souped-up and auctioned models going even higher), makes an estimated $17,250 profit for every car, according to Bloomberg, and BMW, Audi, and Mercedes each make about $10,500 average per car, according to Motor Authority.

Ferrari sold about 8,400 vehicles last year and has a market cap of about $22.6 billion. The sports car company shipped 8,398 cars in 2017 and 8,014 cars in 2016 (a 5 percent increase); the low supply helps keep the car prices high. (Porsche delivered 246,000 vehicles last year, for example, which is a 4 percent increase from 2016.) Ferrari's net profit was $178 million for the first quarter this year, a 19 percent increase.

As Ferrari looks toward filling those orders into 2023, it also wants to extend its growth into new markets such as SUVs and electric vehicles. The company has stated that it wants to be carbon neutral by 2030, something similar we've heard from Ford and other U.S.-based automakers. In order to do that, it plans to have fully electric vehicles by 2025 to go along with its hybrid model released in 2019, which sells for a cool half a million dollars.

Manufacturing electric vehicles could be more acceptable to customers of Ferrari than offering SUVs. First off, Ferrari is not a name you might think of as synonymous with SUVs -- but believe it or not, in the SUV market for supercar automakers, Ferrari is playing a bit from behind and will face competition from Porsche, which released its first SUV in 2002, and from Lamborghini, which entered the market in 2017, along with Aston Martin in 2020.

Ferrari's entry vehicle into the SUV market is called the Purosangue. Though mum is the word related to its sales price and availability date, Vigna claims that the ride of the vehicle is astonishing and will exceed customers' expectations when it becomes available for purchase in 2023 (production will start this year). If Ferrari keeps in line with its historical inventory limitations, the supply will be tight, and if demand is strong, it will work in the company's favor for pricing.

Deliveries in the quarter were driven by the 296 and the SF90 families, while the 812 Competizione A and the Purosangue four-seater were in ramp up phase. The F8 Spider was approaching the end of its lifecycle.

The product portfolio in the quarter included nine internal combustion engine models and four hybrid engine models. Hybrid deliveries reached 51.0% of total shipments in the quarter.

The company now expects its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to reach at least 2.25 billion euros ($2.39 billion) this year, versus a previous - and already improved - forecast of 2.19-2.22 billion euros.

In the July-September period, Ferrari's adjusted EBITDA climbed 37% to 595 million euros, topping analyst expectations of 560 million euros, according to a Reuters poll.

Building off of double-digit growth across all global regions, Ferrari heads into 2022 with a stronger model mix, including the Dayton SP3 and the SUV Purosangue. This should allow the company to meet the needs of customers looking for something more out of their Ferrari, as well as broaden its exposure to new Ferrari customers.

Analysts seem to be on board with the company's plans. Morgan Stanley has Ferrari listed as its top electric vehicle stock for 2022, and the average 12-month price target for all analysts covering the company is $294. That target price reflects a 31% upside from the current price of $224 -- just one of many reasons Ferrari is a buy.