Luxury automotive maker Ferrari (NYSE:RACE) reported robust numbers for the first quarter and reaffirmed its financial outlook. However, shares of the company are trending lower in the early session today after its deliveries to the Chinese region disappointed.
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Robust Growth but China Disappoints
During the quarter, Ferrari’s top line jumped by 10.9% year-over-year to €1.58 billion. Additionally, its EPS ballooned by 20% to €1.95, driven by improving margins. The company achieved this performance despite flat unit shipments, which remained at 3,560. While shipments to the EMEA and Americas regions increased by single digits, those to mainland China, Hong Kong, and Taiwan contracted by 20%. This indicates a weakness in Chinese demand amidst the turmoil in the country’s financial markets.
Nevertheless, the company’s adjusted EBITDA surged by 12.7% to €605 million, boasting a healthy margin of 38.2%. Additionally, its Industrial free cash flow reached €321 million. Clearly, Ferrari’s strategy of prioritizing value over volume is yielding results. Its Q1 performance was driven by positive momentum in product and country mix, along with a robust contribution from personalized offerings. Recently, Ferrari introduced the 12Cilindri and 12Cilindri Spider models. Furthermore, the Purosangue, Roma Spider, and Daytona SP3 models are showing promising performance.
Ferrari’s Forward Guidance
For the full year 2024, Ferrari expects its top line to rise by over 6.4% on the back of positive product and country mix as well as contributions from personalization. EPS for the year is anticipated at or above €7.50.
Is RACE Stock a Buy, Sell, or a Hold?
Today’s bout of share price weakness comes after a nearly 44% jump in Ferrari’s share price over the past year. Overall, the Street has a Moderate Buy consensus rating on the stock, alongside an average RACE price target of $414.91. However, analysts’ views on the company could see changes following today’s earnings report.
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