Morgan Stanley Turns Bullish on Ferrari After Reset

Key Moments

Rating Upgrade and Valuation Outlook

Morgan Stanley on Monday upgraded Ferrari (NYSE:RACE) (BIT:RACE) to Overweight from Equal Weight, arguing that the recent decline in the stock has overly discounted temporary issues rather than structural threats to the business.

The bank raised its price target on Ferrari shares to €380 from €330, suggesting approximately 24% potential upside versus Friday’s close. In Milan, Ferrari’s stock gained 4.4% in early trading on Monday by 07:36 GMT following the call.

Share Price Performance vs Earnings Expectations

According to Morgan Stanley, Ferrari’s shares have fallen about 26% over the past 12 months. Over the same period, consensus earnings forecasts for 2026-27 have been reduced by only around 4%.

The analysts said the stock’s move “has been driven partly by negative earnings revisions, but primarily by multiple compression.” They added, “Our latest work suggests the market has moved too far in pricing these issues as terminal brand risk,” in a note led by Edouard Aubin.

Drivers of the De-rating

Morgan Stanley cited several concerns that had weighed on Ferrari’s valuation:

• A slower growth algorithm outlined at Ferrari’s October 2025 capital markets day
• Pressure on residual values for hybrid models, including the 296 and SF90
• Uncertainty surrounding Luce, Ferrari’s first battery-electric vehicle

Despite these issues, the bank’s dealer checks in the U.S. and Europe indicated that none of them has resulted in enduring damage to the Ferrari brand.

Residual Values: Signs of Stabilization

Morgan Stanley highlighted residual values as the most significant swing factor in its thesis. Dealer feedback suggested that the worst phase is likely over. The 296 GTB was frequently characterized as being at or near the bottom in terms of pricing, with trading activity starting to recover.

At the same time, values for the SF90 Coupe and Spider were reported to be stabilizing after what the analysts described as a substantial reset.

The report also noted that Ferrari’s wider electrification strategy appears to have reignited collector demand for older internal-combustion-engine models. The analysts view this trend as supportive for the overall residual-value ecosystem.

Luce EV Reception and Brand Considerations

On Luce, Ferrari’s first battery-electric model, Morgan Stanley said dealer feedback has been mixed to negative in the near term. Criticism has focused on the vehicle’s design, its launch price of €550,000 in Italy, and uncertainty about the intended buyer base.

However, the analysts argued that the equity market is already reflecting expectations for a weak reception. They added that careful management of production allocation “can limit any brand damage while leaving option value with new clients.”

Exposure to Ultra-High-Net-Worth Demand

Morgan Stanley also highlighted Ferrari’s positioning within what it described as the K-shaped economy, calling this a structural benefit. The bank noted that wealth creation continues to be concentrated among ultra-high-net-worth individuals, who represent Ferrari’s most important customer segment.

Citing data from property consultant Knight Frank, the note said the global ultra-high-net-worth individual (UHNWI) population is projected to increase by around 235,000 between 2026 and 2031, with the U.S. making up roughly 58% of that growth.

Modeling Changes and Assumptions

Reflecting greater confidence in Ferrari’s demand profile, Morgan Stanley reduced its weighted average cost of capital (WACC) to 7.5% from 8.1%. The analysts also lifted their FY27-30 earnings forecasts by around 2% on average.

Summary of Key Morgan Stanley Adjustments