Morgan Stanley upgraded Ferrari (NYSE:RACE) to Overweight from Equal Weight on Monday, arguing that the luxury carmaker’s recent share price weakness has become disconnected from the underlying fundamentals of the business.
The investment bank also increased its price target to €380 from €330, suggesting potential upside of around 24% from Friday’s closing level.
Shares in Ferrari rose 4.4% in Milan trading by 07:36 GMT following the analyst upgrade.
Analysts See Excessive Market Reaction
Over the past year, Ferrari shares have declined roughly 26%, despite consensus earnings forecasts for 2026 and 2027 being reduced by only around 4% during the same period.
According to Morgan Stanley, “has been driven partly by negative earnings revisions, but primarily by multiple compression.”
The bank believes investors have become overly concerned about a series of short-term issues rather than long-term structural challenges.
“Our latest work suggests the market has moved too far in pricing these issues as terminal brand risk,” the team led by Edouard Aubin wrote.
Brand Concerns Yet to Materialise
Investor sentiment has been affected by several factors, including the slower growth outlook presented at Ferrari’s capital markets day in October 2025, declining residual values for hybrid models such as the 296 and SF90, and uncertainty surrounding Luce, Ferrari’s first fully electric vehicle.
However, Morgan Stanley said feedback gathered from dealers across the United States and Europe suggests these concerns have not resulted in any lasting damage to the Ferrari brand.
The bank highlighted residual values as the most significant variable affecting investor perceptions. Dealer checks indicated that pricing for the 296 GTB may have reached a bottom, with transaction activity improving. Meanwhile, values for the SF90 Coupe and Spider appear to be stabilising after experiencing substantial declines.
Electrification Supporting Legacy Models
Analysts also noted that Ferrari’s transition towards electrification may be having an unexpected benefit by increasing demand among collectors for older internal-combustion vehicles.
Morgan Stanley believes this trend is helping to support the broader residual-value environment across Ferrari’s model range.
Luce Reception Already Reflected in Valuation
Regarding the forthcoming Luce model, dealer feedback was described as mixed to negative in the near term. Concerns have centred on the vehicle’s design, its €550,000 launch price in Italy and uncertainty over the target customer base.
Nevertheless, the analysts argued that investor expectations are already low and that Ferrari’s disciplined production strategy “can limit any brand damage while leaving option value with new clients.”
Wealth Trends Remain a Long-Term Tailwind
Morgan Stanley also highlighted Ferrari’s exposure to the so-called K-shaped economy, where wealth creation remains concentrated among ultra-high-net-worth individuals who form the company’s core customer base.
According to property consultancy Knight Frank, the global population of ultra-high-net-worth individuals is expected to increase by approximately 235,000 between 2026 and 2031, with the United States accounting for around 58% of that growth.
Reflecting greater confidence in Ferrari’s long-term demand outlook, Morgan Stanley reduced its weighted average cost of capital assumption to 7.5% from 8.1% and raised its earnings forecasts for the 2027-2030 period by an average of around 2%.