Berenberg ups target on Ferrari ahead of F12berlinetta successor launch

The trajectory Ferrari's earnings were on was underappreciated by investors, Berenberg said.

New price increases were in progress, a new model launch was imminent and a special edition of 2017 vehicles was in the pipeline, Fei Tang, Paul Kratz, Alexander Haissl and Cristian Dirpes said in a research note sent to clients and dated 6 March.

All of those factors combined meant the sports car-marker could "comfortably" overtake its target for €950.0m in earnings before interest, taxes, depreciation and amortisation.

Touting the manufacturer's resilient business and cash generation, they hiked their target price on the stock from €65.0 to €75.0.

The analyst note came one day ahead of the launch of the new F12berlinetta’s successor at the Geneva Motor Show, which the broker said was an opportunity for Ferrari to capitalise on its pricing power.

Maranello-based Ferrari's base F12berlinetta retailed for $319,995 in the States and €276,668 in Europe and Berenberg expected its successor to command at least a 4% higher price tag.

That would mark a break with average annual price increases of roughly 2.5% since the mid-1990s.

Ferrari's free cash flow generation also meant there was scope for share buybacks, they said.

Despite all of the above, the shares were trading at a price-to-earnings multiple of 24, whereas it should be trading at a 10% premium to the luxury goods sector or a P/E of 29 times.

By way of comaprison, Hermes was on a P/E of 36 and it hit a peak of 50 in 2011.

'Buy', Berenberg reiterated.