Ferrari is the IBD Stock Of The Day as it breaks out to record highs. Rising profit estimates, stock buybacks and EV ambitions have lifted Ferrari stock.
Then there's Lewis Hamilton. In 2025, the Formula One driving icon is expected to move to Ferrari from rival Mercedes.
On Aug. 1, the Italian maker of luxury sports cars hiked full-year financial guidance after racing past second-quarter estimates. On July 30, Ferrari announced another tranche of purchases under its 250-million-euro share repurchase program by 2026.
Ferrari is "future-proofing" its earnings potential with a new factory for its first all-electric vehicle, Ferrari stock analysts say. Currently, its vehicle portfolio includes eight internal combustion engine (ICE) models and four hybrid gas-electric models.
Ferrari Stock Breaks Out
Shares popped nearly 5% to 452.83 on the stock market today. Ferrari stock seized a 442.80 buy point from a flat base in huge volume. The supercar stock also offered an early handle entry as it sped past 433.98, which marks the Aug. 1 high. An alternate early entry is the July 12 high of 436.54.
Ferrari stock remains above all the short- and long-term support levels, including the 21-day exponential moving average. It has ridden those levels since the flat base began to form 20 weeks ago.
Choppy, uncertain market action means any stock purchases for the time being carry an elevated element of risk.
The relative strength line for this luxury stock is improving, still below the peak of the latest flat base. The RS line, the blue line in the chart shown, went sideways in the first half of 2024 but is starting to trend higher. A rising RS line shows a stock's outperformance vs. the S&P 500.
Among favorable technical signs, Ferrari stock shows an up/down volume ratio of 1.0. That's offset by an Accumulation/Distribution Rating of C. And the number of funds owning shares fell just a bit in the latest June-ended quarter after rising the previous six quarters, according to IBD Stock Checkup.
This automaker stock shows an 85 Relative Strength Rating out of a best-possible 99. The RS Rating means that Ferrari has outperformed 85% of all stocks in IBD's database over the past year. Year to date, Ferrari stock has jumped 31% on the back of a powerful early February earnings breakout.
Ferrari Earnings Acceleration
Shares of Ferrari boast a 90 Composite Rating out of 99, the highest among 36 automakers tracked by IBD. The Composite Rating combines various technical and fundamental metrics into one easy-to-read score. The luxury-car stock bears a superior 95 EPS Rating.
The company has delivered an unbroken string of quarterly earnings beats stretching back to the March 2021 period, according to FactSet. Earnings and sales growth accelerated in the second quarter, as well. And several Ferrari stock analysts hiked earnings estimates for the full year after its Q2 report.
For Q2, Ferrari reported adjusted EBIT (earnings before interest and taxes) of 511 million euros, up 17% vs. a year ago. Revenue rose 16.2% on shipments of 3,484 vehicles, up 2.7%, the company said on Aug. 1.
The Purosangue (Ferrari's first SUV), the Roma Spider and 296 GTS drove deliveries in the quarter.
Benedetto Vigna, CEO of Ferrari, tied the double-digit increase in earnings and revenue to the "enrichment of the product mix and the increased demand for personalizations" of sports cars.
Citing those same factors and others, the company revised 2024 financial guidance higher. Analysts expect 18% EPS growth for the full year and a 10% gain in 2025, FactSet shows. Ferrari's earnings per share boomed 34% in 2023.
EV Shift, Supercar Stocks, Lewis Hamilton
In Q2, Ferrari inaugurated an "e-building" that will produce combustion engine cars and hybrid vehicles, as well as its first new purely battery electric vehicles.
"Ferrari's new e-building is designed to future-proof the company" for the next 20 to 30 years," RBC Capital Markets analyst Tom Narayan said in June after a tour of the factory.
In 2025, Lewis Hamilton is set to join Ferrari. The seven-time Formula One champion is moving away from Mercedes-Benz, a brand he has been associated with since the age of 13.
Ford, Toyota and Warren Buffett-backed BYD's Yangwang brand also play in the supercar market.
Tesla is said to be eyeing that market.
