Ferrari NV (RACE) was double downgraded to underweight from overweight at Morgan Stanley as analysts become concerned with valuation of the luxury sportscar maker, which has seen its share price more than double since the start of the year.

New competition from McLaren, Aston Martin and Lamborghini could also threaten Ferrari, analyst Adam Jonas said. Investors should prepare for the field of competitors to only get bigger as challenges in the car industry force automakers to segment out some of their most valuable or attractive brands. New entrants into the equity market from supercar makers, including the possibility of a Maserati IPO, would increase the size of the pool from which investors can choose.

Jonas also pointed out the risk of Ferrari potentially entering the SUV market, a move that would expose it to a relatively unfamiliar segment with unknown customers. Rumors swirled in early August that Ferrari plans to announce a four-seat utility vehicle in a move to double profit by 2022.

Ferrari's massive 101% surge in share price since the start of the year could have represented two to three years' worth of appreciation for the stock, Jonas added. Concerns abound that the market isn't sufficiently discounting competition and execution risks that go along with Ferrari's simultaneous normal revenue growth and exponential increase in share price.

Ferrari is "still a great company, but the situation has changed," Jonas wrote.

Ferrari stock was down 7% in midday trading on Thursday, Sept. 7, to $108.67.

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