Ferrari (RACE) has had a rough year — down 23% over the past 12 months, weighed down by investor skepticism over its new electric vehicle launch and concerns about hybrid residual values. But Morgan Stanley says the stock has been punished too harshly, and upgraded Ferrari to overweight from equal-weight on Monday, raising its price target from $388 to $438. That target implies 23% upside from Friday’s close — a significant call from one of Wall Street’s most respected automotive analysts.
Analyst Edouard Aubin made the case succinctly in his note to clients: “The de-rating now overstates brand risk.” The recent drag on Ferrari shares came primarily from the disappointing market reception of its new electric vehicle, Luce — shares fell 5.6% the day the car was unveiled — along with broader worries about hybrid car residual values softening. But Aubin argues that Morgan Stanley’s dealer checks across the U.S. and Europe “do not point to a damaged Ferrari brand.” He found Ferrari’s residuals are bottoming out, Luce’s underwhelming debut is already priced in, and the long-term equity story remains intact — driven by special series releases, scarce allocations, Icona and supercar products, and the pipeline of future collectibles. Ferrari’s model of artificial scarcity, where waitlists and allocation control protect margins and brand prestige, remains one of the most durable business models in luxury goods.
For investors, Ferrari represents a rare luxury asset masquerading as a car company. The stock trades at premium multiples precisely because Ferrari’s earnings are less cyclical than traditional automakers — customers don’t cancel a $400,000 order because interest rates tick up. With 11 of 13 covering analysts rating Ferrari a buy or strong buy, Wall Street consensus broadly agrees with Morgan Stanley’s upgrade. The question now is whether the electric transition challenges are a short-term disruption or a structural issue. Morgan Stanley’s deep-dive dealer research suggests it’s the former. Investors willing to look past the near-term EV noise may find one of Europe’s most reliable compounders trading at a meaningful discount to its intrinsic value.
