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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)  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.”

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) , 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.