Key Takeaways
- Morgan Stanley elevated Ferrari (RACE) from Equal Weight to Overweight, boosting its price target from €330 to €380
- Shares of Ferrari rallied 4.4% in Milan following Monday’s analyst upgrade
- Despite a 26% decline over the trailing twelve months, earnings forecasts were reduced by merely 4%
- Dealer surveys conducted by Morgan Stanley across the U.S. and Europe revealed no permanent brand erosion
- Wall Street’s average price target stands at €377.88, suggesting roughly 23% potential gains, with 23 Buy ratings and 6 Hold ratings
Shares of Ferrari (RACE) surged 4.4% during Milan trading hours on Monday after Morgan Stanley elevated the Italian luxury automaker from Equal Weight to Overweight, while simultaneously increasing its price objective from €330 to €380 — representing approximately 24% potential appreciation from Friday’s closing level.
The ratings adjustment comes after a challenging period for the luxury carmaker. Shares have tumbled roughly 26% throughout the past year, while consensus earnings projections for fiscal years 2026-27 have only been reduced by approximately 4% during the same timeframe.
Morgan Stanley characterized this discrepancy as a significant disconnect. Lead analyst Edouard Aubin and his team noted that the stock’s decline “has been driven partly by negative earnings revisions, but primarily by multiple compression.”
Essentially, the market has been devaluing the shares at a rate that significantly outpaces actual deterioration in the earnings outlook.
The concerns fueling this reassessment were legitimate. Market participants had grown anxious following Ferrari’s October 2025 capital markets presentation that outlined a more modest growth trajectory, declining residual values for hybrid variants including the 296 and SF90, and questions surrounding the Luce — the company’s inaugural all-electric offering.
Morgan Stanley conducted field research to validate these concerns. Conversations with dealership representatives in both U.S. and European markets yielded predominantly positive feedback.
Used Car Values Showing Signs of Recovery
Residual value trends emerged as the most critical factor influencing share performance. Intelligence gathered from dealer networks indicated the 296 GTB is now trading at or close to bottom levels, with transaction volumes beginning to increase. Values for both SF90 Coupe and Spider models also appear to have found stability following a significant correction.
The research team believes the decline in residual values has likely reached its nadir.
Regarding the Luce electric vehicle, dealer sentiment ranged from lukewarm to pessimistic in the short term. Criticisms centered on styling choices, the €550,000 introductory price point in Italy, and ambiguity regarding the intended customer demographic.
However, Morgan Stanley maintains that tepid reception is already reflected in current valuations. The firm emphasized that Ferrari’s disciplined production approach “can limit any brand damage while leaving option value with new clients.”
The investment bank also observed that Ferrari’s transition toward electrification has sparked renewed collector enthusiasm for vintage combustion-engine models, which it views as beneficial for overall residual value stability.
Wealth Concentration Provides Long-Term Support
Morgan Stanley highlighted Ferrari’s customer base of ultra-high-net-worth individuals as a fundamental advantage. According to property consultancy Knight Frank, the global UHNWI population is projected to expand by approximately 235,000 individuals between 2026 and 2031, with the United States representing roughly 58% of this growth.
The firm reduced its weighted average cost of capital assumption to 7.5% from 8.1%, reflecting increased conviction in Ferrari’s sustainable demand profile. Earnings forecasts for fiscal years 2027-30 were revised upward by an average of 2%.
Among 29 analysts covering the stock, the consensus recommendation remains Buy, comprising 23 Buy ratings and 6 Hold ratings. The mean twelve-month price target currently registers at €377.88, implying approximately 23% upside from the June 12 closing price.
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