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Ferrari Cut to Sell; Goldman Cites New Pretax-Profit Target

The scope for positive earnings revisions at Ferrari is "limited,'  Goldman analyst George Galliers said, cutting his rating on the stock to sell.
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Ferrari  (RACE) - Get Report shares fell Monday after Goldman Sachs slashed its rating on the Italian producer of luxury sports cars to sell from buy and cut its price target to $207 from $227.

Goldman analyst George Galliers based his move on fundamentals.

“Ferrari’s recent share price rise has largely been driven by positive earnings evolution and consensus revisions,” he wrote in a commentary.

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“With the company having deferred its 2022 [earnings before interest and taxes] target to 2023, and Visible Alpha Consensus Data already 12% ahead of the now 2023 EBIT target, we see scope for positive earnings revisions as limited.”

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Ferrari stock recently traded at $203.46, down 3.7%. It has climbed 7% over the past month.

While “we expect the broader auto industry to benefit over the next 12-18 months from a sequential improvement in global production, … we do not expect Ferrari to be a notable beneficiary of this development,” Galliers said.

Thus, “We reduce our shipment forecasts for Ferrari for 2021/22/23 by 400/530/1,110 units respectively,” he said.

“We no longer assume that Ferrari will look to catch up all the volume that was lost last year as a result of the COVID-19 production disruption.”

Last week, Ferrari named Benedetto Vigna, an executive at STMicroelectronics  (STM) - Get Report, Europe's largest semiconductor maker, to the post of chief executive. He will succeed Louis Camilleri, who stepped down in December for personal reasons.

In May, Volkswagen’s  (VWAGY)  Lamborghini unveiled an electric-car model, joining Ferrari, Porsche  (POAHY)  and Audi  (AUDVF)  in the race among luxury-auto makers to build electric vehicles.