Morgan Stanley has given Ferrari the number-one spot among auto stocks, as reported by Markets Insider. It says the appeal of the luxury vehicle manufacturer lies in its utterly predictable business model and unrivaled brand.
Previously, Tesla held the number one spot among auto stocks.
“We see Ferrari as the most defensive name in our coverage that avoids much of the EV hype and EV risk. An attractive risk/reward.”
Equity analyst Adam Jonas stated in a letter from the bank on Monday
Morgan Stanley believes that Ferrari can offer a competitive EV offering
The investment bank has increased its price target for the NYSE-listed company Ferrari to $310 per share, up from $280 previously.
The movement of the stock, which had an overweight rating, suggested a price increase of 14% from Friday’s closing price of $271.45.
During the trading session on Monday afternoon, the shares of Ferrari rose by 0.3%, pushing the company’s price above $271 per share.
Tesla shares, which have increased by approximately 58% so far this year, started the week off with a loss of roughly 1.5%.
“Ferrari ain’t cheap, but that’s the price for security.”
Morgan Stanley
According to the bank’s assessment, Ferrari’s potential in the market for electric vehicles needs to be more appreciated.
“Building on their learnings from hybrid and applying the racing DNA, we believe Ferrari can offer an EV that will be just as high in demand as what investors are used to from [an internal combustion engine].”
Equity analyst Adam Jonas
Unmatched brand and market moat
Morgan Stanley stated that despite its relatively pessimistic outlook on the fundamentals of the auto industry, Ferrari holds a “highly predictable business model,” in addition to strong earnings visibility.
In addition, it possesses a “near unmatched brand and market moat” and the greatest price advantage of any company that competes in its industry.
“In our view, buying a Ferrari today is not so much about the sound of the engine or the performance in and of itself. Rather, we think it is a totality of factors that drive customers to want the elements that a Ferrari possesses: scarcity, desirability, connotations of luxury and performance (stemming from Formula 1 racing pedigree), and exquisite Italian design and engineering.
This makes Ferrari the most recession-proof and predictable auto company in our coverage.”
Equity analyst Adam Jonas
The price of Tesla is projected to reach $220 by the bank. On Monday, one share of the company’s stock cost about $195.
See Also
- Geely’s Lotus is going public via SPAC at a valuation of $5.4 billion
- European Union reaches agreement to eliminate combustion-engine vehicles by 2035
- Porsche to IPO in landmark listing Thursday
- Volkswagen announced the Porsche IPO plan despite market doubts
- Cadillac Crossover EV seems prepared to compete with Tesla Model Y
