Ferrari's Rise: Leading the Value Revisions

Home > Industry Analysis > Content

【Summary】Ferrari's fair value estimation has increased, along with other carmakers like Mercedes-Benz and Volkswagen, due to positive quarterly results. Luxury companies Hermes International and L'Oreal also saw their fair value revised upwards. ING Group's fair value increased in the banking sector, while Kone Oyj and Corporacion Acciona Energias Renovables experienced fair value reductions in manufacturing and renewable energy respectively.

FutureCar Staff Aug 16, 2023 9:55 AM PT

Ferrari's Rise: Leading the Value Revisions

July is typically the month when companies report their quarterly earnings, and Morningstar's equity analysts are currently reviewing the fair value estimations for the stocks they cover. While they recently focused on the fair value of UK stocks, they have now shifted their attention to the entire European universe. Between June and July, the analysts revised the fair value estimations for 42 companies, with 30 upward revisions and 12 downward revisions.

One notable upward revision was for Ferrari (RACE), with its fair value estimation increasing from €190 to €257. The Italian carmaker exceeded expectations in the second quarter, posting diluted earnings per share of €1.83, up €0.47 from the previous year. Ferrari's management also adjusted its full-year sales forecast from €5.7 billion to €5.8 billion. Additionally, the fair value estimations for other carmakers such as Mercedes-Benz (MBG), Volkswagen (VOW3), and Renault (RNO) have also been revised upwards.

Mercedes-Benz saw its fair value increase from €109 to €111, Volkswagen's fair value rose slightly from €338 to €344 euros, and Renault's target price increased by €1, from €86 to €87. These revisions were driven by strong quarterly results, with Mercedes-Benz and Renault both reporting higher earnings per share compared to the previous year. Volkswagen's consolidated revenues also exceeded expectations, rising 15% to €80.1 billion.

In addition to the automotive industry, the fair value estimations for luxury companies Hermes International (RMS) and L'Oreal (OR) have also been revised upwards. Hermes International's fair value increased by 28%, from €990 to €1,270, due to strong revenue growth and improved profitability in the first half of 2023. The fair value estimate for L'Oreal was raised to €376 from €336, driven by a higher annual sales growth forecast.

However, not all sectors experienced upward revisions. In the banking sector, the fair value of Dutch ING Group (ING) increased from €17 to €19 euros. On the other hand, Kone Oyj (KNEBV), a leading manufacturer of elevators and escalators, saw its fair value decrease from 56 euros to 48 euros. The decline in market activity in China, which is a crucial market for Kone, contributed to this reduction. The fair value of Spanish renewable energy developer Corporacion Acciona Energias Renovables (ANE) was also reduced by 9%, from €35 to €32, due to lower electricity prices in the short term.