3 Reasons Why Ferrari Snagged An Upgrade From Morgan Stanley

Despite reporting top- and bottom-line consensus beats, Ferrari NV (NYSE: RACE) fell as much as 13 percent Wednesday after its CEO called 2022 targets “aspirational.”

Given a night to mull the stock’s prospects, both the Street and Morgan Stanley came out slightly more bullish Thursday.

The Rating

Morgan Stanley's Adam Jonas upgraded Ferrari from Underweight to Equal-Weight and raised the price target from $110 to $120.

The Thesis

The upgrade is based on three factors, Jonas said in the Thursday note. (See his track record here.)

• Ferrari “materially derisked” the Street’s expectations for an upcoming presentation of 2022 targets by conceding and alluding to risks. “We believe that, given management’s and the board’s goal of protecting the brand and creating long-term value, the introduction of more balance in the targets is completely warranted," the analyst said. 
• Morgan Stanley professed confidence in Ferrari’s new CEO, who brings previous experience from the board and a worthy reputation from Philip Morris International Inc. (NYSE: PM). Louis Camilleri’s focus on long-term strategy over near-term results is seen to drive execution.
• A smaller gap between the stock price and Morgan Stanley's target yields balanced risk-reward.

Price Action

Ferrari shares were trading up 5.93 percent to $125 at the time of publication Thursday. 

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