Ferrari, the Italian luxury sports car maker, might be on track to reach its long-term profitability targets two years ahead of schedule, according to a new analysis from AlphaValue/Baader Europe. The equity research firm projects that the company's earnings before interest and taxes (EBIT) margin could climb to roughly 30-32% by 2028, driven by a richer product mix and a more favorable-than-expected launch of its first fully electric vehicle.
What's Driving the Optimism?
AlphaValue/Baader Europe points to two key factors behind the potential acceleration. First, Ferrari is increasingly focusing on its highest-priced models and extensive customization options. This "richer mix" means selling more of the most expensive cars—like limited-edition supercars and bespoke commissions—which carry significantly higher profit margins. Customization, from unique paint colors to personalized interiors, adds substantial revenue without requiring major changes to the production line, allowing more of each additional euro to flow directly to the bottom line.
Second, the analyst team believes Ferrari's upcoming electric vehicle (EV) launch will be "less dilutive" than many investors fear. While transitioning to EVs typically requires heavy investment in new platforms and battery technology, Ferrari's brand strength and pricing power may allow it to maintain high margins even on its first electric model. The company has already signaled that its EV will be positioned at the top of the market, with a price tag likely exceeding €500,000, helping to protect profitability.
Context: Ferrari's Current Position
Ferrari has long been one of the most profitable automakers in the world, with EBIT margins consistently above 20%—far higher than mass-market rivals. The company's strategy of limiting production to maintain exclusivity and pricing power has been central to its success. In 2023, Ferrari delivered just over 13,600 cars globally, a fraction of the output of brands like BMW or Toyota, but generated record profits.
The company has previously set ambitious 2030 targets, including an EBIT margin of around 30%, as part of its long-term plan to expand its luxury offerings and electrify its lineup. If AlphaValue/Baader Europe's forecast is correct, Ferrari could reach that milestone by 2028, two years early. This would be a significant achievement, especially as many legacy automakers struggle with the costs of electrification and margin pressure.
Ferrari's limited-edition models, such as the recently unveiled 12Cilindri Manuale at €590,000, exemplify the high-margin strategy. These exclusive cars are often sold out before production begins, generating strong demand and pricing power.
What It Means for Investors
For everyday investors, this analysis suggests that Ferrari's profitability could improve faster than expected, potentially boosting earnings per share and supporting the stock price. Higher margins mean the company can generate more cash from each car sold, which could be used for dividends, share buybacks, or further investment in new models and technology.
However, investors should be aware of the risks. The luxury car market is sensitive to economic cycles—if a recession hits, demand for €300,000+ cars could soften. Additionally, the transition to EVs carries execution risk, as Ferrari must maintain its brand's exclusivity and performance reputation while adapting to new technology. The company's ability to command high prices for its EV will be crucial.
It's also worth noting that Ferrari's stock trades at a premium valuation compared to other automakers, reflecting its strong brand and profit margins. If the company delivers on these accelerated targets, the stock could continue to perform well. But if margins disappoint or the EV launch stumbles, the premium could compress.
For context, other companies have also set ambitious long-term targets. For example, Constellation Brands reaffirmed its 2027 profit targets as UBS sees resilient margins, while Airbus targets over 900 jet deliveries in 2026 after a strong first half. These examples show that achieving long-term goals often depends on execution and market conditions.
What to Watch Next
Investors should keep an eye on Ferrari's upcoming quarterly earnings reports for signs of margin improvement and updates on the EV launch timeline. The company is expected to reveal more details about its first electric model in the coming months, including pricing, specifications, and production plans. Any indication of strong pre-orders or higher-than-expected customization revenue could support the analyst's bullish view.
Additionally, broader economic trends—such as interest rates, inflation, and consumer confidence in key markets like the US, China, and Europe—will influence demand for luxury goods. Ferrari's ability to maintain its pricing power in a potentially slower economy will be a key test.
In summary, AlphaValue/Baader Europe's analysis paints an optimistic picture for Ferrari, suggesting that its 2030 profitability targets could be reached by 2028. While risks remain, the combination of a rich product mix and a well-executed EV launch could make the Prancing Horse even more profitable than expected.
