Morgan Stanley has upgraded Ferrari to Overweight from Equal-weight, stating that the recent de-rating of the luxury carmaker's shares has gone too far. The bank's analysts argued that current valuations do not reflect the company's pricing power, order backlog, and resilient margins, which remain among the strongest in the automotive sector.
Ferrari's stock has come under pressure in recent months as part of a broader sell-off in luxury goods, driven by concerns over weakening demand in China and higher interest rates globally. However, Morgan Stanley believes the sell-off has been excessive, noting that Ferrari's unique brand positioning and limited production volumes insulate it from the worst of the cyclical headwinds.
The upgrade comes as the FTSE 100 and European indices have experienced heightened volatility, with investors rotating out of growth and luxury stocks amid uncertainty over central bank policy. Ferrari, which is listed on the Milan stock exchange, is widely held by UK institutional investors and is a component of many European equity funds popular with British pension holders.
Analysts at Morgan Stanley highlighted that Ferrari's forward price-to-earnings ratio has contracted by roughly 20 per cent from its peak, bringing it closer to historical averages. They described the current entry point as attractive for long-term investors, citing the company's strong pipeline of new models and its ability to maintain high pricing even in a softer economic environment.
The luxury sector has been under scrutiny this year, with rivals such as Aston Martin and Porsche also facing margin pressures. Nonetheless, Ferrari's order book reportedly extends well into 2025, providing revenue visibility that many competitors lack. Morgan Stanley's call suggests that the worst of the selling pressure may be behind the stock.
For UK investors, the upgrade serves as a reminder that selective opportunities exist even in turbulent markets. While Ferrari shares are not directly listed in London, they feature prominently in many global equity income and growth funds. Source: Morgan Stanley research note.