'Customers will come': analysts defended Ferrari's first electric car after its shares plunge

Shares of Italian luxury car maker Ferrari fell more than 5% on May 26 on the New York Stock Exchange: investors reacted negatively to the presentation of a new electric car, which received tepid reviews online. However, analysts are not in a hurry to join the chorus of critics: some on Wall Street hope that the car will help Ferrari attract a new audience, and do not give up their forecasts of stock growth.

On May 25, Ferrari unveiled the Luce, its first all-electric car, in Ma. Investors were concerned that the new model would not be able to boost sales due to too radical differences in design from the rest of the brand's lineup. Against this background, at the end of trading on May 26, the automaker's securities fell by 5.2% in New York. At the pre-market on Ma. 27, however, they recovered some of their losses.

The market's negative reaction is partly due to a wave of criticism of the new electric car on social media, CNBC notes. "Never thought I'd say this about Ferrari, but this is one of the ugliest electric car designs in history and it can be yours for only $640,000, lol," Tesla investor and columnist Sawyer Merritt (1 million followers) wrote on social network X.

Nevertheless, a number of analysts remain optimistic, seeing the new model as a driver for long-term growth, CNBC writes. The electric car from Ferrari comes amid low demand for luxury cars with electric motors. However, investment firm Bernstein believes that the arrival of the Luce will help stimulate sales, which will eventually lead to an increase in the carmaker's shares.

"In the 1989 movie Field of Miracles, Iowa farmer Ray Kinsella is walking through his cornfield and hears a voice telling him to build a baseball field there: 'Build it and they will come,'" noted Bernstein analyst Steven Reitman. - The launch of Ferrari's first battery electric car, the Luce, may not have the same mystical overtones as the aforementioned movie, but the expectations aren't too different: If Ferrari builds a car, the customers will come."

Bernstein rates Ferrari stock "Outperform" (Outperform rating) with a $402 target price, which implies a 22% upside from its closing level on May 26.

Evercore ISI analyst Michael Binetti has a similar position. In his analytical note, he recognized that the initial reaction to Luce may play into the hands of "bears" in the short term. "However, it is too early to draw final conclusions," the expert emphasizes. - Apparently, the car will be sold almost exclusively to new customers who are not yet part of Ferrari's base. And this audience, most likely, simply does not participate in the current network discussions of the release".

The analyst as well as strategist Bernstein gave Ferrari shares an Outperform rating with a $475 target price, suggesting a potential upside of 44% from Tuesday's closing level.

Evercore ISI and Bernstein's forecasts reflect the general optimism on Wall Street. According to MarketWatch, the vast majority of experts believe in the company's prospects, with 22 of 27 analysts recommending the stock to buy (17 give the stock a "buy" rating and five give it an "above market" rating). The remaining five experts advise "hold" the securities, and no analysts have given them a sell rating.

This article was AI-translated and verified by a human editor